Sunday, April 30, 2006

Not One but Two More Book wait lets make it 3

I have got three book reviews today..because here at Crazy Steve's ValueBlogReview we stock them deep so we can sell them have been plodding along reading some books and I thought I would update you quickly on some of them..

I read this book

As I have said previosuly when talking about the book on Charlie Munger

the author Janet Lowe has carved out a nice niche for herself doing bio's on famous investors/business people.

This book is obviously about Benjamin Graham. For those of you who want a little more background on Graham this is a good book.

Like the Munger book this book was not that great of a read (defined as not wanting to out the book down while reading and lookign foward to the turn of the page), but it was worth reading because it gives you a little bit of history of who Graham was.

The best part of the book from apurley how to invest better point of view comes in chapter 7...where Lowe provides a 14 point check list of what Graham's ideas are all about. I think the summary is a good overview of the main ideas of Graham and helpful if you are trying to figure out what Graham is writing about in some of his books.

The next book I read is

As I mentioned before this book starts out slow...and actually gets a little slower...but that doe not mean it is not a good book to read...just a little hard to make good headway on..took me about two weeks to read it. Essentially this book is a history of the title states.

It does a good job of teling how time after time...human beings get excited about a new idea or industry and allow emotion to take over in their investing... simply put they allow thier emotionns to convinve them that stock prives have no connection or need for underlying value...and thats what gets people hurt when prices crash...

the title of the book "devil take the hindmost" is a phrase that means basically that the devil will catch the slowest person...with regards to speculation it means that the person who loses is the last one to realize that the bubble has burst and the music has stopped...

the book also makes an interesting point about "intrinsic value" being an oxymoron...pointing out that "intrinsic" is an internal measurment while "value" is external...which is why Graham said that stocks are short term popular votes but long term weighed....

One of the best things about this book is that it gets me thinking about stock ownership...I mean if I buy one share of a company am I an owner of course..but if the company has 10 billion shares outstanding like MSFT...what does one share really mean in the grand scheme of an owner...thats why understanding the value of a company with regard to its stock price is important...and understandoing that the stock price does not represet the true value of a company but rather the perception of its value by other investors...hence the oxymoron between intrinsic and value (a company is worth what it is worth...a stock price sels for what people believe it is worth).

Overall, the book was a bit long but well worth the read as I obviosuly learned something and thats all I ever want when I read a book.

The final book on the review today is

as many of you are aware provides a lot of analysis of stocks as well as mutual funds...this book provides an overview of the methodology of how they review stocks.

The book has the standard way of describing how to read a financial to evaluate a company for a competitve advantage and how to do a dicusounted cash flow analysis...if you follow at all than it is a good resource book to understand what they are doing..even if you dont follow them the book is a good overview fo stock evaluation...

The very best part of the book comes in the second half...the book breaksdown the 12-13 sectors that stocks are classified in...and discusses what performance indicators are importanrt to each industry...and how to compare them...banks hjave different metrics than a grocery store which is valud differnet than an insurance company which is valued different than etc...

simply put not every valuation technique works for every industry or sector and it is important to know that you cant just say well this company has the lowest price to book (p/b) so it must be the best...each sector or idustry will have its own p/b which must be compared first to the industry average before using to compare cross-sector....

I must point out that I subscribe to Morningstar's premium service and think it provides a good learning tool to understand the flow of the reading this book helps me have a reference to quickly understand what it is morningstar is doing if I get a bit confused...

this does not mean this book is not uiseful to people who are not using morningstar at all or a little bit...just is a bit more relevant if you do.

Overall I think this is a book people should pick up and read to understand how to read a financial statement, value a company, perofrm a fair value analysis, and understand how sectors function.

Whew...thats all for reviews....actually I have been holding off on reviewing Phil Town's book...but will probably do it this week...

I am currently reading

and so far it is really great and I am looking forward to reviewing it...

hope you all have a good week

Take Care