FYI | Feb 14 2011
By Rudi Filapek-Vandyck, Editor FNArena
The Conscious Investor, Profiting from the Timeless Value Approach, by John Price, PhD.
Let there be applause. "The Conscious Investor" by John Price is one mighty effort. No doubt it will be of great assistance to anyone seeking to master the art and practice of establishing a value for share market listed equity. However, and there is one big however, the most important characteristic of "The Conscious Investor" is not what is printed on its 366 pages, it is what has remained absent and that should have been a passionate plea about why valuing shares is something every serious long term investor should embrace.
There are two obvious catalysts for making this point. One is that many self-do investors have been burnt, and badly so, by the relentless sell-offs in global equity markets between late 2007 and early 2009. The experience has not only left a lasting sour taste with prospective retirees, leading many to simply abandon the market place, but it has also transformed large numbers into punters and traders with a shorter-term market focus. Big drivers behind remaining investor interest are now "momentum" and technical charting, not "value" with patience having all but evaporated.
The second catalyst is the book itself. The Conscious Investor is a marvelous and insightful, thorough compilation with encyclopedic quality of known, popular and lesser known methods -even including the obscure- to generate a valuation for corporate equity. It combines the weird and the wacky with the straightforward and the practical. At times, however, the reader is left with inner discomfort, possibly even disappointment as all valuation techniques have one painful conclusion in common: they are all imperfect, one way or the other. This then leads to obvious questions such as "why exactly did I just read that chapter?", "is this really going to help my understanding of the share market?", culminating into the obvious "should I be paying attention to any of this?"
Readers who have been reading my personal analyses and observations throughout the years know the answer to that last question is a firm "yes". Because if you're participation in the market is not aimed at making an extra buck in the next five minutes, then "valuation" might just turn out to be your best friend. But you gotta have confidence and patience too. This is why I think John Price should consider adding a chapter or two for the next edition, and make it a personalised, passionate recourse of how and why a combination of decent research, a cheap valuation and a good amount of time more often than not will generate returns most market participants can only dream about.
In the absence of such two chapters I think The Conscious Investor comes with a major risk; it risks sapping one's enthusiasm for true and genuine value-investing. As much as the author's drive to explain and document thoroughly, and to display pros and cons, has produced a truly handy investment bible for valuers of corporate equity, it also provides plenty of potential discouragement for the lesser experienced and the not so confident. I am making this statement as an analyst of financial markets who's equally passionate and convinced that when it comes to investing, valuations do matter, even if that isn't always immediately apparent to those with a shorter-term focus.
The information on display is diligent, impartial and well-documented. Those with a similar passion for value-investing can only be grateful for the time and the passion that led to the end result achieved. A passionate plea that mastering this essential skill in order to become a successful investor is definitely worth the time and effort would make The Conscious Investor an even better achievement. This is one book that will retain a prominent spot on my book shelf.
The Conscious Investor. Profiting from the timeless value approach by John Price, PhD was published by Wiley Finance. 366 pages with a hard cover. Recommended Retail Price $62.95 but those interested can purchase a copy for $56.65 via the FNArena Investment Shop (see website).
Readers interested in more book reviews can also read the following stories:
FNArena Book Review: The Profit Principle
FNArena Book Preview: How an Economy Grows and Why it Crashes – by Peter and Andrew Schiff
FNArena Book Review: Shares & Taxation by Jimmy B Prince
FNArena Book Review: The Big Short by Michael Lewis
For those readers looking to purchase the next investment book at a discount, we have lined up our Top Ten of Best Selling Books:
Shares and Taxation
Shares to Buy And When
Trading from Your Gut
Top Stocks 2010
Way of the Turtle
Trade Your Way to Financial Freedom
Catherine Davey CFD Twin Pack
Trading For A Living
Trading in the Zone
Secrets for Profiting in Bull and Bear Markets
For more information on these books/discounts available, see http://www.moneybags.com.au/default.asp?d=0&t=1&c=148&a=171
