Though not exactly a book related to value investing, this oft-cited work of Princeton economist Burton Malkiel discusses many important features of stock market investing. An understanding of its prime contentions is useful for beginners and experts alike. The author now turns his attention to discrediting fundamental analysis. The author discusses several academic studies (including some of his own work) that show how analysts add no value in predicting future earnings and how most mutual... Read Full Story

As this site has grown in reach over the last several months, the amount of reader feedback I have received has accelerated. Unquestionably, the articles that generate the most feedback are those related to particular securities (as opposed to a general article on investor behaviour...like this one). However, while the majority of sites stick to writing about stocks on which they are bullish, I also tend to write about stocks in which I'm not interested, in order to discuss the reasons that ... Read Full Story

Though not exactly a book related to value investing, this oft-cited work of Princeton economist Burton Malkiel discusses many important features of stock market investing. An understanding of its prime contentions is useful for beginners and experts alike. In this chapter, Malkiel discusses whether or not technical analysis (as described in previous chapters) actually works. The answer is a resounding no.Malkiel himself claims not to know a single chartist who has become rich because of hi... Read Full Story

DryClean USA (DCU), soon to be known as EnviroStar (EVI), is a distributor of laundry equipment. This is a tiny company, with a market cap of just $7 million. But for value investors who simply focus on buying businesses that trade at discounts to their intrinsic values (instead of trying to apply small-cap or illiquidity discounts), some of this company's numbers are appealing.The company's market cap is not much higher than its net cash position of $6 million. Often, a stock with a high ca... Read Full Story

Investors should be aware that certain stakeholders of financial statements can exert pressure or political influence that results in accounting rules that distort the true economic picture of a business. Investors need to be aware that such situations exist so that they ensure they have made adjustments that reverse these distortions.For example, it took many years before officials finally caved and made stock option expensing mandatory. Managements, fearing that they would have to lower th... Read Full Story

As value investors, we often foray into areas of investment that nobody else will. Current earnings may be poor, the outlook uncertain, and the returns not expected for several years. In return for these sacrifices, we require one attribute on which we are unwilling to compromise: a large margin of safety. We are not interested in 10% off or even 20% off, because in the aggregate that does not give us adequate upside for our efforts. Our valuations could be off by such figures, or an adverse... Read Full Story

Greetings Readers!Those who tried to access the site over the weekend will have encountered errors. For this, I apologize. Unfortunately, I received the following e-mail from Blogger (my site's platform provider) over the weekend:Hello,Your blog at: has been identified as a potential spam blog. To correct this, please request a review by filling out the form at xxxxx...We find spam by using an automated classifier. Automatic spam detection is inherently fuzzy, and occasionally a blog like ... Read Full Story

Though not exactly a book related to value investing, this oft-cited work of Princeton economist Burton Malkiel discusses many important features of stock market investing. An understanding of its prime contentions is useful for beginners and experts alike. Investment professionals base their decision-making process on one of the two methods discussed in the first few chapters: castle-in-the-air, or firm-foundation. Castle-in-the-air theorists use what is called 'technical analysis' while f... Read Full Story

Though not exactly a book related to value investing, this oft-cited work of Princeton economist Burton Malkiel discusses many important features of stock market investing. An understanding of its prime contentions is useful for beginners and experts alike. Having poked holes in the "Castle In The Air" approach to investing, Malkiel now discusses the Firm Foundation approach. (Both of these approaches were introduced in Chapter 1.) The author discusses what he considers to be the four key d... Read Full Story

On this site, we have at times made fun of the findings of various stock market analysts. In the book Managing Investor Portfolios: A Dynamic Process, the esteemed authors discuss some of the traps analysts fall into when making their forecasts.1) Anchoring trap. The mind gives a disproportionate amount of weight to the first information received on a topic. Keeping an open mind and avoiding premature conclusions is a way to avoid this trap.2) Status quo trap. Forecasts tend to perpetuate re... Read Full Story