Table of Contents of the Book: 8170948711

Contents Contents

Introduction: Beyond the Traditional Measures of Value

§ Value Investing — The Traditional View

§ Beyond the Traditional Measures of Value

Secret # 1: Understanding the Value Investor’s Psychology

§ Start Afresh

§ Accept the Limitations of Your Analysis

§ Loss is a Probability That Will Happen

§ Consensus Will Eventually Set the Price of a Stock

§ Higher Risk is a ‘Chance’ of Higher Rewards

Secret # 2: Are You Really Value Investing?

§ Watching the Winners is Not Enough

Secret # 3: Preparing for Value Investing

§ Have a Plan and Arm Yourself

§ Parameters for Value Investing

§ Don’t Get Excited by Events or ‘Excitement Creators’

§ Chart Your Own Course

§ Think About Risk Before Returns

§ Watch for the 7th, the 8th . . . Chamber in the Revolver

§ Carry Only What You Don’t Have to Sell in a Hurry

Secret # 4: Beware the Myths of Value Investing

§ Investing for the Long Term

§ Don’t Pick Stocks on the Wrong Syllabus

Secret # 5: The Reality of Value Investing — Six Degrees of Under-Valuation and Over-Valuation

§ An Under-Valued Stock May Remain Under-Valued for Years

§ Value Investing is Like Pegging a Tent in Shifting Sands

§ Is There Anything Fundamental About ’the Fundamentals’?

§ Short or Long Term Does Not Depend on You — It Depends
on the Management

§ ‘Cheap’ and ‘Value’ Are Not the Same Thing

Secret # 6: Mastering the Rules of the Game

Secret # 7: The Ways of Value

§ Sell When Investment Themes Run Out

§ Increasing Excitement Equals Over-Valuation

§ Markets Will Over- and Under-React to the
Underlying Dynamics

§ Fast Growth May Increase Revenues but Squeeze Margins
— Or May Even Put Companies Out of Business

§ Emotional Temperament

§ Diversification is Not the Done Thing

§ Don’t Confuse Beginner’s Luck with Skill

§ Timing the Market is the Only Way to Beat It

§ Technology and Financial News are Not a
Competitive Advantage

§ Human Behaviour Guides Markets

§ Experience Has No Substitute

§ The Blind Spot

§ Full Points for Being Right, None for Winning Arguments

§ A Booming Economy Whips Most Stocks in the Long Run

§ ‘The Anchor Effect’ Sets the Price of a Stock

§ Overcharged Bull Markets Make Value Elusive

§ Look Over Your Shoulder at All Times

§ What Do We Get from the ‘Gurus’ of Value Investing

§ A Stock’s Price is Only as Good as the Management’s Intent

§ Value is Oblivious to Bull or Bear Markets

Secret # 8: Where Does Value Originate?

§ Markets Never Rise or Fall Forever — The Law of
Means Catches Up

§ Cycles and Trends

§ Catching the Structural Shift in the Market

§ Buying in a Fire Sale and Selling as the Plane is Taking Off

§ Not by Diversification

§ Tune Out the ‘Noise’

§ Long Term Thinking, Yes, Staying Put in a Stock, No

§ In Getting One Right and Letting the Other Nine Go

§ Not in ‘Cheap’ Stocks

§ In Holding On Till the Tank is Full

§ In Structural Shifts

§ A Diamond Comes Mixed in a Ton of Mud

§ In Staying Invested as Long as is Necessary

§ In ‘New Era’ or ‘New Asset Class’

§ Black Swans Bring Value

Secret # 9: Where Does Value Disintegrate?

§ Two Dimensional Thinking in a 3-Dimensional World

§ ‘Buy’ and ‘Hold’

§ Out of Favour, Out of Value!

§ Awe and Reverence

§ Accounting Ponzi Makes a Mockery of Value

Secret # 10: The Value Mirage

§ Risk and Reward Have an Absolute Correlation

§ Booming Economies Produce Value Stocks

§ Markets are Efficient

Secret # 11: How to Find Value

§ The Courage to Act on Your Beliefs

§ Hang in There When an Investment Mania Starts

§ Lock in the Sector before Latching on to the Stock

§ All Falls are Not Created Equal — Some are Created for Value

§ A Liquidity Squeeze Offers Value and is Different from a Bubble

Secret # 12: Finding Value in the Market’s Dynamics

§ Human Behaviour Holds the Secret to Stock Prices

§ History is Stuffed with Precedents

§ Market Cycles

§ Trends are Not Cycles

§ Eras, Bubbles and Manias

§ There are Often No Rational Explanations for Market Meltdowns

Secret # 13: What the Market is Saying About Value

§ Value Lessons from the Market

§ Reading Investment Themes

§ The Economic Domino

§ Watch Out for Window Dressing

§ The Changing World of Miss Value

§ Cash Flow Rotation

§ Value Investing on Themes

§ Value Investing is Linked to Commodity Cycles

§ Value Emerges as Sectors Clean Out

§ A Rising Tide Takes Up All Ships

§ Contagions Pollinate Value

§ The Commoditization of Stocks and Sectors

§ How Value Emerges in Chaos

§ Execution Record in Emerging Sectors is Value

§ The Scarcity Premium

§ Looking Out of the Window May Help You See Value

§ Value in Debris

§ Value Lies in Deconstructing Myths

§ Sails Need to be Redirected If the Winds Shift

§ Whose Boat are They Rowing?

§ Objects of Popular Fantasy are Fuel to the Fodder

§ Value is Built and Destroyed Over a Number of Actions
and Reactions

§ Ask the Hard Questions — Or Face Soft Returns

§ Empty Vessels Make the Loudest Noise — But Remember,
It is Only Noise

§ ‘If You Have to Spin Off, Then I Must Be a Part of It’

§ Value in the ‘House of Horrors’

§ 24-Hour Media Coverage Magnifies Contagions

§ Manic Behaviour Comes to Roost

Secret # 14: Value Investing Lessons from the Masters