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Value Investing: Tools and Techniques for Intelligent Investment | 
| Author: James Montier
Publisher: Wiley
Category: Book
List Price: $39.95
Buy New: $20.90
as of 7/31/2010 03:17 CDT details
You Save: $19.05 (48%)
New (36) Used (9) from $20.68
Seller: turningnewleaf
Rating:  8 reviews
Sales Rank: 40583
Media: Hardcover
Pages: 414
Number Of Items: 1
Shipping Weight (lbs): 1.9
Dimensions (in): 9.7 x 6.7 x 1.3
ISBN: 0470683597
Dewey Decimal Number: 332.6
EAN: 9780470683590
ASIN: 0470683597
Publication Date: December 14, 2009
Availability: Usually ships in 1-2 business days
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Product Description
"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 cares about their capital!"
âSeth Klarman, President, The Baupost Group LLC The seductive elegance of classical finance theory is powerful, yet value investing requires that we reject both the precepts of modern portfolio theory (MPT) and pretty much all of its tools and techniques. In this important new book, the highly respected and controversial value investor and behavioural analyst, James Montier explains how value investing is the only tried and tested method of delivering sustainable long-term returns. James shows you why everything you learnt at business school is wrong; how to think properly about valuation and risk; how to avoid the dangers of growth investing; how to be a contrarian; how to short stocks; how to avoid value traps; how to hedge ignorance using cheap insurance. Crucially he also gives real time examples of the principles outlined in the context of the 2008/09 financial crisis. In this book James shares his tried and tested techniques and provides the latest and most cutting edge tools you will need to deploy the value approach successfully. It provides you with the tools to start thinking in a different fashion about the way in which you invest, introducing the ways of over-riding the emotional distractions that will bedevil the pursuit of a value approach and ultimately think and act differently from the herd.
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| Customer Reviews:
Showing reviews 1-5 of 8
 A waste of an afternoon June 24, 2010
Erik T. Nelson
1 out of 1 found this review helpful
If you haven't read any of the other books available on behavioral economics, you didn't know that low p/e stocks (or p/b, p/s, etc) tend to outperform high p/e stocks, you think that markets are efficient, or you haven't heard of Ben Graham, then you'd probably get a lot out of this book. It's well written, and often entertaining.
Personally though, I was dissapointed. The first section spells out, in laborious detail, that the markets are not always rational. I'm sure there are a few academics around who disagree, but not many. Other writers made the same points long ago, and I seriously doubt that anyone who would buy a book with "value investing" in the title takes the idea seriously.
The second section is on behavioral economics. He goes over the same fifty or so experiments that every book on the subject seems to cover, and offers no new insights.
The third and fourth sections lay out what he thinks value investing is all about. He's more along the lines of Ben Graham than Warren Buffett, and has little or nothing in common with Marty Whitman, who also wrote a book with the title "Value Investing." (Whitman's book is poorly written, and a much less pleasant read, but ultimately far more insightful and valuable.) Montier is fond of developing numerical models, then back-testing them to see how they would have done over the last 30 years or more. His approach strikes me as a bit naïve. He rails against those who put too much faith in mathematical models based on past performance, then spends a lot of time discussing mathematical models based on past performance. Value investing, as I understand it, is figuring out much something is worth and buying it if you can get away with paying substantially less. Montier pays lip service to this idea, but that isn't really what he advocates in a lot of the book.
The fifth section covers short selling. I found this to be the best section of the book. In brief, he explores the idea that a value investor, when unable to find much that's cheap enough to buy, might want to sell short the most expensive stocks. There's a bit more to it than that, including the basics of looking for problems on the balance sheet, problem CEOs, etc. I wasn't entirely convinced that the risks of shorting the high-flyers are worth the possible gains, but he did provide food for thought. I'll probably read this section again.
The final section is largely a collection of thoughts on what to do when the market crashed in 2008-9. In a word, buy. Frankly, if you're a value investor, you didn't have to be told. A few other topics were covered, but I didn't find anything useful or insightful.
I should also note, as other reviewers have, that the book is repetitive in the extreme. This is largely a collection of articles, with no real effort made to put them together in a cohesive way. In fact, you can probably track down a lot of it on the internet. You'll sometimes find the same sentence, or even an entire paragraph repeated verbatim three, four, or even more times. Several times I thought I might have misplaced my bookmark, but the problem was with the book, not with me. Bruce Greenwald, who wrote the Foreward, views this as an advantage. He's wrong. I should also point out that Montier, though sometimes insightful, at other times just doesn't make sense. For example, he spills quite a bit of ink telling the reader not to forecast. He doesn't admit it, but a lot of his methods (strictly speaking, all of his methods) involve forecasting. I think he's trying to distinguish some sorts of forecasts from others, but he doesn't make this clear, and certainly doesn't offer any convincing argument for this view. Oh, and there are precious few of the "Tools and Techniques" referred to in the subtitle.
 Validates several value investing approaches through data June 6, 2010
Anurag Gupta (Bangalore, India)
0 out of 1 found this review helpful
James Montier discusses several areas related to value investing. The book is a collection of articles he wrote. The book provides several insights - several of these have been tested for data going back a couple of centuries. Quite a bit of data / analysis overlaps amongst the different articles.
1. The first seven chapters are devoted to showing data and inferences that debunk the efficient market hypothesis. For those who have already bought into this argument, this may be a tad tiring.
2. The next seven chapters discuss theory and practical ways to incorporate behavioral aspects into investment decisions.
3. The third section discusses his philosophy of investing, focusing on process instead of outcomes, becoming aware of confirmation bias, becoming aware of action bias, and need for skepticism.
4. The fourth section validates value investing approaches by analyzing data from companies across the globe.
5. The fifth section deals with shorting from a value investing perspective. Past results in this section are the least compelling compared to the other sections.
6. The final section is a collection of articles analyzing financial events as they unfolded over the last couple of years around the globe.
The book could have been shorter if articles were combined into a cogent book form. We would, however, lose real-time aspects of analysis as events unfolded.
full of insight and great reading May 23, 2010
A. Menon (Hong Kong)
1 out of 2 found this review helpful
I have always liked reading James Montier, his work generally helps one remember to take a step back and assess objectively from all angles whatever one is analysing. This book is a collection of essays written leading up to and during the financial crises we have been witnessing. Despite his continual claims that investors are unable to time markets with any consistency, the number of times in which the author seems to be able to do so gives some pause for thought. The book is a nice mixture of case evidence of major human biases as well as investment themes that hold true by hanging on to simple consistent measures.
The behavioral investment biases we all have are too numerous to state, but the author always does a remarkable job of reminding us that, they are always with us. These identifications and experimental evidence of our various cognitive biases are always fun to read, one often finds themselves falling into the same buckets as those who are making those "categorical" errors. The use of case examples is not without imperfection though as there are definitely some cases presented for which either the case does not correspond to a financial example or the case is a poor case study to begin with. As a quick example there was a scenario given in which a football(soccer) coach suffered a horrendous defeat and then played a subsequent game and either won or lost, and the audience was asked how the coach would feel in these two situations depending on whether he had changed the strategy after the first defeat, the audience tilted towards saying the coach would feel worse on the second defeat had he not changed the squad. This was then used towards arguing that people use results as the means of judgement rather than process. Had the experiment been roulette black/red bets, yes, for a 90 minute match suffering a massive defeat implies a process error. Anyway, minor issue, but every so often the points dont necessarily follow from the examples.
The investment theses of the book are very fun to read. The author is very vocal about the need to have simplicity at the heart of ones investment thesis, using a larger and larger set of variables generally does not improve predictive ability, in fact the author believes that information overload reduces predictive ability. He generally argues for the long run return of value over growth and backs it up with simple screening and subsequent return profiles of going long value short growth. One of the more remarkable results, though implicit in the previous sentance, was when the author discusses the negative correlation of GDP growth and stock market returns, ie the faster the economies were growing, the worse their equity returns (meaning that people's expectations tend to run ahead of reality). Slightly isoteric, but the the authors article on dividend swaps was perfect timing and an excellent call on a versatile hedge to many states of the world.
All in all, great reading. It was repetitive at times due to the combined essay approach rather than focused subject appraoch of the work. The author is always consistent and his conservatism allowed him to buy the markets he had been waiting for to be cheap and avoid the losses most of the crowds had been elusively chasing. His timing was excellent despite having no desire nor confidence in being able to do. The author forcefully argues that that at deep value, yes prices can go against you as they always can, the margin of safety that one has if right manifests itself in short/medium/long term outperformance. Strategies that are used with the goal of making consistent short term returns at the expense of long run value are more likely to be similar to picking up pennies in front of a steam roller.
 Recycled May 3, 2010
tandembicycling (Tucson)
2 out of 2 found this review helpful
While this book contains interesting info and stats, it is mostly composed of articles/columns that were previously written over several years. Each chapter references the current crisis from a different spot on a time line. Because each chapter also comes from a different analytical perspective, there are a lot of variables between chapters so the book doesn't feel like it hangs together. There is not a lot of practical advice. The many screening variables mentioned are not available in the screens I have access to on my brokers' websites or online. The behavioral chapters are pretty much repeated in his "Little Book of Investing" which I liked a lot better. Interesting, but too haphazard.
 Much ado about nothing April 24, 2010
Charles Coker (Alexandria, Va)
2 out of 5 found this review helpful
This is more of a definition of Value Investing rather than a "How To book." Boooooring !!! No useful insigh on how to find value stocks. The author spends laborish pages on definitions of value - who needs definitions. If you are looking for something that gets to the point then you are wasting your time reading this books. I bought the book because of the high profile recommenddations and with the hopes of gleaning seasoned knowledge of what I actually needed to look for when I'm valuing a stock. For example, should I screen for high ROE or low ROE, how do I put an intrinsic value on a stock, what pitfalls to look for. After reading the first two chapters and thumbed through 6 more, I finally came to the conclusion that I was on the wrong path to knowledge. Waste of your time. In regards to the high profile referrals - I doubt very seriously if they actually read the book.
Showing reviews 1-5 of 8
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