Value Investing: Tools and Techniques for Intelligent Investment
"As with his weekly column, James Montier's Value Investing is a must read for all students of the financial markets. In short order, Montier shreds the 'efficient market hypothesis', elucidates the pertinence of behavioral finance, and explains the crucial difference between investment process and investment outcomes. Montier makes his arguments with clear insight and spirited good humor, and then backs them up with cold hard facts. Buy this book for yourself, and for anyone you know who...
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"James Montier combines a profound understanding of behaviorial finance with a fierce adherence to the tried and tested principles of value-investing. He is always readable, thought-provoking and, above all, correct."—Edward Chancellor, author of Devil Take the Hindmost: A history of financial speculation "James' latest effort is a must read. It combines great academic and practitioner approaches written in a humorous and entertaining style. It has practical real world examples that don't require advanced mathematics to comprehend. I advise everyone to read and study this wonderful book. All of my students now have Value Investing: Tools and Techniques for Intelligent Investment to add to their required reading."—Mark Cooper, Partner at Omega Advisors & Adjunct Professor at Columbia Business School "A preponderance of evidence shows that successful long-term investing requires a strong value orientation and a proper temperament, virtues commonly blunted by behavioural and incentive-based biases. Montier, a leading light in value investing and behavioural finance, shows you what’s wrong with standard investment thinking and offers important insight into how to improve your process. Read Value Investing, live its lessons, and prosper."—Michael J. Mauboussin, Chief Investment Strategist at Legg Mason Capital Management, and author of Think Twice: Harnessing the Power of Counterintuition
Preface xiForeword xviiPart I Why Everything You Learned in Business School is Wrong 11 Six Impossible Things before Breakfast, or, How EMH has Damaged our Industry 32 CAPM is Crap 193 Pseudoscience and Finance: The Tyranny of Numbers and the Fallacy of Safety 294 The Dangers of Diversification and Evils of the Relative Performance Derby 395 The Dangers of DCF 476 Is Value Really Riskier than Growth? Dream On 577 Deflation, Depressions and Value 65Part II The Behavioural Foundations of Value Investing 738 Learn to Love Your Dogs, or, Overpaying for the Hope of Growth (Again!) 759 Placebos, Booze and Glamour Stocks 8510 Tears before Bedtime 9311 Clear and Present Danger: The Trinity of Risk 10512 Maximum Pessimism, Profit Warnings and the Heat of the Moment 11313 The Psychology of Bear Markets 12114 The Behavioural Stumbling Blocks to Value Investing 129Part III The Philosophy of Value Investing 14115 The Tao of Investing: The Ten Tenets of My Investment Creed 14316 Process not Outcomes: Gambling, Sport and Investment! 16517 Beware of Action Man 17318 The Bullish Bias and the Need for Scepticism. Or, Am I Clinically Depressed? 18119 Keep it Simple, Stupid 19520 Confused Contrarians and Dark Days for Deep Value 205Part IV The Empirical Evidence 21521 Going Global: Value Investing without Boundaries 21722 Graham's Net-Nets: Outdated or Outstanding? 229Part V The 'Dark Side' of Value Investing: Short Selling 23723 Grimm's Fairy Tales of Investing 23924 Joining the Dark Side: Pirates, Spies and Short Sellers 24725 Cooking the Books, or, More Sailing Under the Black Flag25926 Bad Business: Thoughts on Fundamental Shorting and Value Traps 265Part VI Real-Time Value Investing 27927 Overpaying for the Hope of Growth: The Case Against Emerging Markets 28128 Financials: Opportunity or Value Trap? 29129 Bonds: Speculation not Investment 29930 Asset Fire Sales, Depression and Dividends 30931 Cyclicals, Value Traps, Margins of Safety and Earnings Power 31532 The Road to Revulsion and the Creation of Value 32533 Revulsion and Valuation 34334 Buy When it's Cheap - If Not Then, When? 35535 Roadmap to Inflation and Sources of Cheap Insurance 36136 Value Investors versus Hard-Core Bears: The Valuation Debate 371References 379Index 383
