Name: Value investing
ISBN: 9780470116739

Value investing

"Value Investing is a must for any serious investor wishing to gain a better understanding of the principles and practices behind this time-tested approach. It will earn a place on the bookshelf next to Graham and Dodd's Security Analysis and Graham's The Intelligent Investor."--BOOK JACKET.

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assemblymanNov 2025

Ah no, I meant these ones by Graham:

https://www.amazon.com/Intelligent-Investor-3rd-Ed/dp/006335...

https://www.amazon.com/Security-Analysis-Seventh-Principles-...

I'll paste a couple more readable ones too :)

https://www.amazon.com/Concentrated-Investing-Strategies-Gre...

https://www.amazon.com/Value-Investing-Graham-Buffett-Financ...

Like I said to someone else above, I myself put almost all my savings in index funds and slowly read/study these just for curiosity. Eventually, I hope to actually spend some time looking at real data but even if I don't find any interesting stocks or lose my modest starter funds for this activity, I would be okay with it.

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kriroMar 2020

I think the first question that you will face is if you agree with the Efficient Market Hypothesis (EMH) and the random walk. Basically they say that prices reflect all available information and that you cannot "beat" the market (there's a subtle difference between EMH and random walk). The return on an investment is a direct reflection of the risk. Good reading to get an understanding for this are "A Random Walk Down Wall Street" and papers by Eugene Fama (EMH will be covered by any intro to finance book as well). For a good overview of EMH, I like this paper: http://www.cs.ucl.ac.uk/fileadmin/UCL-CS/images/Research_Stu...

The investment takeaway is that you should invest in passive index funds with low management cost (typically ETFs).

There's different contrasting points of view most notably behavioral finance. The EMH argument is basically the market is an aggregation of all available information. Due to the power of averaging it is going to be correct (if one person overestimates, another will underestimate and it will all cancel out). The behavioral counterargument is that there are certain human biases that lead to all parties being wrong in the same direction (such as risk aversion). Another POV that is aligned with the behavioral view is that the theory of evolution provides a good framework for thinking about markets. I like the book "Adaptive Markets" which also gives a good overview of EMH and behavioral finance so I'll recommend that as a reference. I think together with "A Random Walk Down Wall Street" you're set for "general framework of thought" material.

Personally, I am a value investor so I can only recommend books from that school of thought. The basic idea is that you look at the fundamentals of a company and the stock market can misprice them. The holy grail is finding a company where the sum of (current) assets is worth more than the current market valuation via the stock price because in essence that means if the company would be liquidated and everything would be sold off, you'd still walk away with a profit. In essence, you're trying to buy 1$ for < 1$. This is Buffett's philosophy and he has done really well with it. I'd recommend "Value Investing" by Greenwald, Kahn, Sonkin and van Biema as a good intro book that summarizes everything and has some easy to follow examples (because you can't usually just take the assets face value but have to discount them etc.). The classics are "The Intelligent Investor" and "Security Analysis" (more academic but for me this is the gold standard). If you need a quick "how to read balance sheets/income statement/cash flow statements" I'd recommend "Warren Buffett Accounting Book"

I think the best essay that describes what markets are good for is "The use of Knowledge in Society" by Hayek. At least it makes sense for me that they serve the function of aggregating local and specialized information. If you're interested, it's also a decent idea to research the different theories of the business cycle. Keynesian, Real Business Cycle, Austrian etc.

tl;dr:

- A Random Walk Down Wall Street

- Adaptive Markets

- Value Investing (+ Warren Buffett Accounting Book)

Edit: I'm assuming you want a "quick overview". Otherwise, get some mainstream Finance and Behavioral Finance textbooks :D

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mitchelldeacon9Mar 2020

I studied economics in college, then I worked for a few years as a business journalist before I finally switched careers to IT systems engineering. The following is a list of my favorite books on financial securities, banking and investment theory. These books are generally comprehensible to anyone with an interest in the subject, regardless of their educational background.

Arrighi, Giovanni (1994) The Long Twentieth Century: Money, Power and the Origins of Our Times

Brealey, Myers, Allen (2011) Principles of Corporate Finance, 10th ed.

Bruck, Connie (1988) Predators' Ball: Inside Story of Drexel Burnham and Rise of Junk Bond Raiders

Fisher, Philip (2003) Common Stocks and Uncommon Profits and Other Writings, 2nd ed.

Fridson, Martin and Fernando Alvarez (2002) Financial Statement Analysis, 3rd ed.

Graham, Benjamin, J. Zweig, D. Dodd (2006/08) Intelligent Investor, rev ed; Security Analysis, 6th ed.

Greenblatt, Joel (1999) You Can Be a Stock Market Genius

Greenwald, Kahn, Sonkin, Biema (2001) Value Investing: From Graham to Buffett and Beyond

Henwood, Doug (1997) Wall Street: How It Works and for Whom

Levitt, Arthur (2003) Take on the Street: How to Fight for Your Financial Future

Lewis, Michael (2010/1989) Big Short; Liar's Poker

Lynch, Peter and John Rothchild (2000) One Up on Wall Street, 2nd ed.

Mishkin, Frederic (2004) Economics of Money, Banking and Financial Markets, 7th ed.

Taleb, Nassim Nicholas (2005/10) Fooled by Randomness, 2nd ed.; Black Swan: Impact of the Highly Improbable, 2nd ed.

Vilar, Pierre (1976) A History of Gold and Money: 1450-1920

Tracy, John A. (2009) How to Read a Financial Report: Wringing Vital Signs out of the Numbers, 7th ed.

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mitchelldeacon9Sep 2016

Here is my short list of favorite books on finance and economics:

FINANCIAL SECURITIES / BANKING / VENTURE CAPITAL

Bruck, Connie (1988) Predator's Ball: Inside Story of Drexel Burnham and Rise of Junk Bond Raiders

Draper, William (2011) Startup Game

Graham, Benjamin and Jason Zweig (2006) Intelligent Investor, revised ed.

_________ and David Dodd (2008) Security Analysis, 6E

Greenblatt, Joel (1999) You Can Be a Stock Market Genius

Greenwald, Kahn, Sonkin, Biema (2001) Value Investing: From Graham to Buffett and Beyond

Henwood, Doug (1997) Wall Street: How It Works and for Whom

Levitt, Arthur (2003) Take on the Street: How to Fight for Your Financial Future

Lewis, Michael (1989) Liar's Poker: Rising Through the Wreckage on Wall Street

_________ (2010) Big Short: Inside the Doomsday Machine

STATISTICS

Ayres, Ian (2007) Super Crunchers: Why Thinking by Numbers is the New Way to Be Smart

Bernstein, Peter (1996) Against the Gods: Remarkable Story of Risk

Kahneman, Daniel (2011) Thinking, Fast and Slow

Silver, Nate (2012) Signal and the Noise: Why So Many Predictions Fail, but Some Don't

Taleb, Nassim Nicholas (2005) Fooled by Randomness, 2E

_________ (2010) Black Swan: Impact of the Highly Improbable, 2E

BUSINESS DEVELOPMENT / ENTREPRENEURSHIP / INNOVATION

Christensen, Clayton (1997) Innovator's Dilemma

Stone, Brad (2013) Everything Store: Jeff Bezos and the Age of Amazon

Wallace, James and Jim Erickson (1992) Hard Drive: Bill Gates and Making of the Microsoft Empire

Walton, Sam with John Huey (1992) Sam Walton: Made in America

Wilson, Mike (1996) Difference between God and Larry Ellison: Inside Oracle Corp

POLITICAL ECONOMY / THEORY / ECONOMIC HISTORY

Arrighi, Giovanni (1994) Long Twentieth Century

Braudel, Fernand (1979) Civilization & Capitalism 15th-18th Century, vol. 3: Perspective of the World, trans. Siân Reynolds

Brechin, Gray (2006) Imperial San Francisco: Urban Power, Earthly Ruin

Heilbroner, Robert (1999) Worldly Philosophers: Lives, Times & Ideas of Great Economic Thinkers, 7E

Marx, Karl (1867) Capital, vol. 1

Stiglitz, Joseph (2003) Roaring Nineties: A New History of the World’s Most Prosperous Decade

_________ (2010) Freefall: America, Free Markets and the Sinking of the World Economy

Vallianatos, E.G. (2014) Poison Spring: Secret History of Pollution and EPA

Vilar, Pierre (1976) A History of Gold and Money: 1450-1920

Yergin, Daniel (1992) Prize: Epic Quest for Money, Oil and Power

Would enjoy email correspondence with anyone interested in these subjects: mitchelldeacon9@gmail.com All the best

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tomkarloMay 2012

There's a million models, but there isn't going to be one that's universally correct. The problem is that the inputs are generally too subjective and too noisy in any model that includes future earnings (there are some conservative ones that are based only only on past performance, but they will never match with an IPO valuation.)

A great place to start is this book: Value Investing: From Graham to Buffett and Beyond ... by Bruce C. N. Greenwald ... most folks will say it's too conservative but it's a starting place.

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arturadibFeb 2011

Hey guys, I was there for the demo yesterday. I wanted to talk to you but I had to leave early due to a prior commitment. I hope you'll take the comments below as constructive criticism.

To better prepare for my comments, let me start with a few facts most investors don't know. (For the impatient, there's a TL;DR at the end).

1) The stock market is not infinitely resilient; the price of a security does respond to investors' actions, as per supply-demand.

2) The price of a stock is not a random, meaningless number that keeps going up and down in funny ways; it actually measures the market price of the company (aka 'market cap', which is roughly equal to the number of shares times the share price).

3) The market price of a company is a very, very important barometer for both the company and the overall economy; to name a few, decisions for M&A (mergers and acquisitions) by other companies are based on such numbers, as are lending and investment decisions by banks.

4) For a lot of companies, the vast majority of their shares are traded/held by individual investors like you and me (as opposed to institutional investors, like pension funds, college endowments, mutual funds, etc); for the curious, you can check out the quantity 'institutional ownership' percentage of a company using your favorite stock quote tool (e.g. Google Finance).

An important corollary of the above facts is that, collectively, individual investors like you and me have an enormous power in driving up and down the market prices of public companies. Consequently, if most investors base their buy/sell decisions on criteria other than company valuation, it is likely that their actions will be doing a serious disservice to the market as whole: market prices of companies will no longer reflect the company's value (see below), and will instead reflect whatever is it that investors based their decisions on (such as the phases of the moon, whether the company is being hyped up in the media, amazing little charts that try to predict what the market will do next, etc).

Somehow we've got to an unfortunate place where many companies and publications incentivize investors to think in terms of "what will the market do", "let's ride this climbing wave", "don't be the last sucker to leave this stock", etc, instead of asking the simple question "is this company over- or under-priced?". This is bad for the market, bad for the economy, and consequently bad for investors.

I hope these words will help you reconsider the direction you're heading with StockYoyo. We need tools that empower investors to make more educated decisions, and not more "go-with-the-flow" services.

Check out Trefis.com for a step in the right direction. (DISCLAIMER: I am not by any means affiliated with them).

May I recommend the following literature:

- Irrational Exuberance, by Robert Shiller (For a gentle introduction on how collective misguided investment can lead to bad things)

- Value Investing, by Bruce Greenwald et al (For a gentle introduction to value investing)

- Security Analysis, by Graham and Dodd (To learn from the masters, using good old English from the 30s)

TL;DR: Services that treat the stock market as a gambling machine ("will it go up??") are doing harm to the market and the economy. Stock prices have a purpose and a meaning, and the market is suffering from the ill-advised actions of investors, who are victims of services that incentivize trades based on things other than company valuation, such as silly technical indicators, or popular consensus on whether a stock is going up or down.

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