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A multifaceted approach to value investing with stock valuation based on intrinsic value estimated from cash returns, appraised value of assets, and other facets of value.



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General Books G-Z

The following books, articles, and other resources are cited briefly elsewhere in the web site or are considered useful for investors at different stages of the craft and art of value investing.

NOTE: Article links often change. In case of a bad link, use the publication's search facility, which most have, and search for the headline.

SOURCE Book, Article or other Resource ISBN 0140187073 Gaddis, William, 1993, c1975, JR. Introduction by Frederick R. Karl. A comic tale of free-enterprise America and an eleven-year-old capitalist. ISBN 0028611160 Geld, Eric, 1996, 10-Minute Guide to Annual Reports and Prospectuses. New York: Macmillan Spectrum/Alpha, a Simon & Schuster company. ISBN 0674290712 Goodman, Nelson, 1983, Fact Fiction and Forecast, 4th edition, Cambridge: Harvard University Press. Counterfactual conditionals, confirmation theory, scientific method of induction, and the theory of projection. ISBN 0140270159 Gordon, John Steele, 1997, The Extraordinary Life and Times of Our National Debt. New York: Walker and Company. A highly readable and insightful look at the U.S. political economy with discussion of monetary and fiscal policy, the federal debt, corporate and personal taxes, marginal tax rates, progressive taxes, social engineering, three fatal flaws of the Keynesian theoretical model, the gold standard, fiat money, speculative bubbles, government bookkeeping, cash versus double-entry accounting, company financial reports, accounting shenanigans, investing in common stocks, and evaluating securities. The real jewel of all is the author's insight into human passions. On page 137, "It might be called the Madison Effect, in honor of James Madison's famous dictum that "Men love Power." After all, until Keynes, politicians had not needed economists for help with running the country any more than they had needed astronomers. But Keynes made them indispensable, and economists quickly realized that. And the political power that Keynesianism has given economists has made them, understandably, reluctant to abandon it, despite its failures. Like socialism, the theoretical promise of Keynesianism is so bright that its failures have always been ascribed, among the believers, to poor execution or minor flaws, not to fundamentally faulty theory. ISBN 0393314251 Gould, Stephen Jay, revised and expanded 1996, The Mismeasure of Man. New York: W.W. Norton &Company. Introduction, pg. 19: The original title for The Mismeasure of Man would have honored my hero Charles Darwin for the wonderfully incisive statement that he made about biological determinism to climax his denunciation of slavery in the Voyage of the Beagle. I wanted to call this book Great Is Our Sin--from Darwin's line, cited as an epigraph on my title page: "If the misery of our poor be caused not by the laws of nature, but by our institutions, great is our sin." The definitive refutation of the argument of The Bell Curve, and a good contribution to the sociology of science, especially scientific research in the social sciences such as psychology and economics. ISBN 0716704765 Hardin, Garrett and John Baden, eds., 1977, Managing the Commons. San Francisco: W. H. Freeman. ISBN 0609805290 Hartmann, Thom, 1998, The Last Hours of Ancient Sunlight : Waking Up to Personal and Global Transformation. Northfield, VT: Mythical Books. The general price level is a primary determinant of the appropriate discount rate to use in the traditional calculation of investment value. The "core" Consumer Price Index excludes the "high-noise" factors of energy and food. Ancient sunlight refers to non-renewable energy resources in the form of fossil fuels or coal, crude oil and natural gas. The book argues that the dominant global economy is inherently self-destructive and unstable due to its over-centralization and the wasteful consumption of its limited irreplaceable natural resources. Prior civilizations have collapsed due to the debasement of their currency, in turn due to the sudden rapid increases in energy prices and inflation. ISBN 0887307043 Hawken, Paul, 1993, The Ecology of Commerce: A Declaration of Sustainability. New York: HarperCollins. Practical, economically sound, extensive, systematic analysis of business design and culture. "Markets, so extremely effective at setting prices, are not currently equipped to recognize the true costs of producing goods. Because of this, business has two contradictory forces operating upon it: the need to achieve the lowest price in order to thrive if not survive in the marketplace, and the the increasingly urgent social demand that it internalize the expense of acting more responsible toward the environment. Without doubt, the single most damaging aspect of the present economic system is that the expense of destroying the earth is largely absent from the prices set in the marketplace." ISBN 0786311207 Helfert, Erich A., 1996, Techniques of Financial Analysis : A Practical Guide to Managing and Measuring Business Performance, 9th Edition.
ISBN 0517548232
Hazlitt, Henry, 1979, Economics in One Lesson : The Shortest and Surest Way to Understand Basic Economics, New Edition, New York: Random House Three Rivers Press. An analysis of economic fallacies that influence government policies. The central error is repeated throughout and is summarized at the beginning of Chapter XV How the Price System Works on page 103: "The whole argument of this book may be summed up in the statement that in studying the effects of any given economic proposal we must trace not merely the immediate results but the results in the long run, not merely the primary consequences but the secondary consequences, and not merely the effects on some special group but the effects on everyone." The fallacies are the result of the special pleadings of selfish interests represented by interest groups, and this introduces the political dimension of government policy and thus political economy. The main noteworthy omission is an elaboration about market externalities which are those things not included in the pricing process such as environmental degradation. In addition, public policy unavoidably overrides purely economic considerations, for example, the subsidization of single-family housing ownership in order to create a larger group of stakeholders to stabilize society, thus a larger middle class of citizens.
S-WoBA: 1998 No. 1 Jennergren, L. Peter, June 16, 1998, A Tutorial on the McKinsey Model for Valuation of Companies,  Stockholm School of Economics/EFI Working Paper Series in Business Administration. This paper presents a simplification and extension of the McKinsey model. See the book listing for Copeland. Abstract: All steps of the McKinsey model are outlined. Essential steps are: calculation of free cash flow, forecasting of future accounting data (profit and loss accounts and balance sheets), and discounting of free cash flow. There is particular emphasis on forecasting those balance sheet items which relate to Property, Plant, and Equipment. There is an exemplifying valuation included (of a company called McKay) as an illustration. Includes downloads of the paper, tables and a worked example. ISBN 0262611406 Kennedy, Peter, 1998, A Guide to Econometrics, 4th edition. Boston: The MIT Press. Intuitive introduction to statistical hypothesis testing applied to economics. See the listings for Hubert M. Blalock and John Y. Campbell. ISBN 1573921394 Keynes, John Maynard, 1953, The General Theory of Employment, Interest, and Money. New York: Harcourt Brace Jovanovich. ISBN 0521230705 Keynes, John Maynard, 1983, out-of-print, Donald Moggridge, editor. The Collected Writings of John Maynard Keynes, Volume XII, Economic Articles and Correspondence : Investment and Editorial. New York: Cambridge University Press. ISBN 0678000107 Keynes, John Neville, 1973, c1890, The Scope and Method of Political Economy, 4th edition. Clifton, NJ: A. M. Kelley. ISBN 0465044042 Kindleberger, Charles P., 1989, Manias, Panics, and Crashes : A History of Financial Crises, revised edition. New York: Basic Books. ISBN 0393307387 Lasch, Christopher, 1979, The Culture of Narcissism : American Life in an Age of Diminishing Expectations. New York: W. W. Norton. ISBN 0814454917 Lasry, George, 1979, out-of-print, Valuing Common Stock : The Power of Prudence. New York: AMACOM. Chapter 10 Prudence, 208. ISBN 0471059706 Lefèvre, Edwin, 1994 (1923), Reminiscences of a Stock Operator. New York: John Wiley & Sons. Perspective of a full-time stock trader (as contrasted to an investor) and his mindset. Every long-term investor must one day buy and sell securities, i.e. trade in the market, and these vicarious lessons may help. ISBN 0140143459 Lewis, Michael, 1989, Liar's Poker : Rising Through the Wreckage on Wall Street, New York: Penguin Books. A book about trading (as contrasted to investment) with a behind-the-scenes look at the chaos of trading, investment banking, and corporate finance at some of the largest and most powerful firms.
book search or library Livens, Leslie, 1986, out-of-print, Share Valuation Handbook : Techniques for the Valuation of Shares. London: Fourmat Publishing. ISBN 0140255346 Lowe, Janet, 1994, Benjamin Graham on Value Investing : Lessons from the Dean of Wall Street. New York: Penguin Books. An attempt to make The Intelligent Investor accessible to a general audience. Includes an introduction to Benjamin Graham's investment ideas, analysis of his thought process, and his biography. ISBN 0070388644 Lowe, Janet, 1996, Value Investing Made Easy : Benjamin Graham's Classic Investment Strategy Explained for Everyone. New York: McGraw-Hill. Another attempt to make The Intelligent Investor accessible to a general audience. A review of Benjamin Graham's investing principles. Lowe acknowledges encouragement from Warren Buffett. ISBN 0465084672 Lynch, Aaron, 1996, Thought Contagion : How Belief Spreads Through Society. New York: Basic Books. Introduces memetics, the new science of memes or self-propagating ideas with an analogy to genetics and the science of genes and their evolution. One explanation of financial fads, manias and popular delusions in the stock market. ISBN 0471133094 Mackay, Charles, 1932, Extraordinary Popular Delusions and the Madness of Crowds. New York: The Noonday Press division of Farrar, Straus and Giroux. See the listing for Martin S. Fridson.
library Medawar, Peter B., 1964, "Is the Scientific Paper Fraudulent? : Yes, It Misrepresents Scientific Thought," Saturday Review, August 1. The theory underlying the inductive method is not sustainable. ISBN 0471248843 Moore, Keith M., 1999, Risk Arbitrage : An Investor's Guide. New York: John Wiley & Sons. ISBN 1556239718 Pratt, Shannon P., Robert F. Reilly, and Robert P. Schweihs, 1996, Valuing a Business : The Analysis and Appraisal of Closely Help Companies, 3rd edition. Chicago: Irwin Professional Publishing. ISBN 0553375407 Quinn, Daniel, 1992, Ishmael. New York: Bantam Books. Explains why the world is facing a man-made ecological crisis. Complements Jared Diamond's Guns, Germs and Steel which explains how we came to be facing this crisis. ISBN 0071386262 Schilit, Howard M., 1993, Financial Shenanigans : How to Detect Accounting Gimmicks & Fraud in Financial Reports. New York: McGraw-Hill. Includes Preface, Ch.1 What Are Shenanigans?, Ch. 2 Searching for Shenanigans, Ch. 3 Number 1: Recording Revenue Too Soon, Ch. 4 Number 2: Recording Bogus Revenues, Ch. 5 Number 3: Boosting Income with One-Time Gains, Ch. 6 Number 4: Shifting Current Expenses to a Later Period, Ch. 7 Number 5: Failing to Record or Disclose All Liabilities, Ch. 8 Number 6: Shifting Current Income to a Later Period, Ch. 9 Number 7: Shifting Future Expenses to the Current Period, Ch. 10 Cash is King: Study the Statement of Cash Flows, Ch. 11 Keep Everything in Balance: Inventory, Sales, and Receivables, Ch. 12 Preventing Shenanigans, Ch. 13 A Century of Shenanigans. ISBN 007058043X Siegel, Jeremy J., 1998, Stocks for the Long Run : The Definitive Guide to Financial Market Returns and Long-Term Investment Strategies. New York: McGraw-Hill. Part I: The Verdict of History, Part II: Stock Returns, Part III: Economic Environment of Investing, Part IV: Stock Fluctuations in the Short Run, Part V: Building Wealth through Stocks. Cites favorably with approval an academic journal article by Rolf W. Banz "The relationship between return and market value of common stocks" JFE 41 (September 1986): 779-793, which is not valid due to the logical circularity of market value (size) in the an econometric asset pricing model. Banz (1986) is where the spurious size-effect anomaly and small-cap fallacy originated, and it has the aspects of a hoax. Also mentioned are the inexplicable short-term (one year or less) seasonal calendar-effect anomalies in total returns. The argument of the book is that U.S. stocks have experienced total returns superior to bonds, bills, and gold for periods of 20 years since the late 1800's and thus can be expected to do so in the future. Yet past performance is not a guarantee of future results. Mr. Siegel knew or had reason to know that size, as measured by market capitalization, and value, as measured by book-to-market equity ratio, are neither logically valid nor scientifically valid as explanatory factors in an econometric model of expected total return for stock-portfolio pricing. Yet Mr. Siegel approves of the size and value risk factors in the Fama and French Three-Factor Model of return, which is a fatal fallacy due to violation of genuine method by vicious circular reasoning in the form of what in econometrics is known as circular simultaneity..
book search or library Smith, Gordon V., 1988, out-of-print, Corporate Valuation : A Business and Professional Guide. New York: John Wiley & Sons. Chapter 5 Valuing a Business, "Valuing the Securities of a Business Enterprise", 102. Assumes minority interests without control. Includes special considerations such as degrees of difficulty, premium for control, lack of marketability and liquidity, non-operating property, special business segments (holding companies, high-tech businesses, regulated businesses, and mineral exploration businesses), 105. ISBN 0671015206 Stanley, Thomas J. and William D. Danko, 1996, The Millionaire Next Door : The Surprising Secrets of America's Wealth. New York: Simon & Schuster. The academic researchers discovered seven common denominators among those who successfully build wealth. (1) They live well below their means. (2) They allocate their time, energy and money efficiently, in ways conducive to building wealth. (3) They believe that financial independence is more important than displaying high social status. (4) Their parents did not provide economic outpatient care. (5) Their adult children are economically self-sufficient. (6) They are proficient in targeting market opportunities. (7) They chose the right occupation. In addition, he or she is a compulsive saver and investor. He or she built wealth through discipline, sacrifice and hard work. ISBN 0835915824 Stevens, G. T., Jr., 199n, The Economic Analysis Of Capital Expenditures for Managers and Engineers. Simon & Schuster. This book is intended for use as a text in economic analysis. It is primarily concerned with the techniques for evaluating and comparing capital investments. It has some features that are not usually included in a book of this type. These are (1) explicit definitions of equity, operating, and total cash flows, and (2) a detailed discussion of minimum annual revenue requirements and their use in the evaluation of projects. This book also includes certain new tax regulations that are related to capital investments. ISBN 0887306381 Train, John, 1980, The Money Masters. New York: Harper & Row. Nine great investors, their winning strategies, and how you can apply them. 1. Warren Buffett; 2. Paul Cabot; 3. Philip Fisher; 4. Benjamin Graham, Footnote to Graham--Tweedy, Browne; 5. Stanley Kroll; 6. T. Rowe Price; 7. John Templeton; 8. Larry Tisch; and 9. Robert Wilson. ISBN 0887306373 Train, John, 1989, The New Money Masters. Winning investment strategies of 1. Jim Rogers; 2. Michael Steinhardt; 3. Philip Carret; 4. George Soros; 5. George Michaelis; 6. John Neff; 7. Ralph Wanger; and 8. Peter Lynch. Appendix I: James Rogers's Investment Worksheet.
library The Wall Street Journal, 16 January 1997, "Traders Laugh Off the Official Estimate on Earnings, Act on Whispered Number", C1, C20. Small investors are typically out of the loop, and the impact is greatest in the case of fast growing, science and technology companies. ISBN 0446526428 Wasserstein, Bruce, Big Deal : 2000 and Beyond, updated edition 2000, originally published as Big Deal : The Battle for Control of America's Leading Corporations. New York: Warner Books. Updated edition includes mergers and acquisitions in the digital age. Big Deal part one is a history of mergers in the U.S. with five "waves" from late 1800's to 2000. Part two is about the corporate strategy behind mergers and presents for models: (1) McKinsey's market share; (2) Boston Consulting Group's three factors of (a) experience curve, (b) product life cycle, and (c) portfolio balance of four product types with different cash flow characteristics; (3) Michael Porter's five forces of (a) rivalry among competitors, (b) substitute products, (c) potential entry, (d) bargaining power of suppliers, and (e) bargaining power of buyers; and (4) Hamel and Prahalad's core competencies. Part three discusses the merger process and the structure and implementation of merger deals. The 927-page book includes arguments for and against mergers, a Bibliography (pp. 896-901), and a detailed Index (pp. 902-927) that includes numerous entries under the headings "Courts", "Discounted cash flow model (DCF)", "Management", "Shareholders", "Shark repellents", and "Valuation." ISBN 0156063123 Williams, Jan R., CPA, PhD, 2000 annual edition, 2000 Miller GAAP Guide : Restatement and Analysis of Current FASB Standards. New York: Harcourt Professional Publishing. [Table of Contents]
book search or library Williams, John Burr, 1954, International Trade Under Flexible Exchange Rates. Amsterdam: North-Holland Publishing Company. A book that globalizes his Theory of Investment Value (see Special Books).


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