Authors: James Montier
ISBN-13: 9780470683590, ISBN-10: 0470683597
Format: Hardcover
Publisher: Wiley, John & Sons, Incorporated
Date Published: December 2009
Edition: (Non-applicable)
James Montier is a member of GMO's asset allocation team. Prior to that he was global strategist for Société Générale and Dresdner Kleinwort. He has been the top rated strategist in the annual extel survey for most of the last decade. He is also the author of three other books – Behavioural Finance (2000, Wiley), Behavioural Investing (2007, Wiley) and The Little Book of Behavioral Investing (Forthcoming, Wiley). James is a regular speaker at both academic and practitioner conferences, and is regarded as the leading authority on applying behavioural finance to investment. He is a visiting fellow at the University of Durham and a fellow of the Royal Society of Arts. He has been described as a maverick, an iconoclast, an enfant terrible by the press.
"James Montier combines a profound understanding of behaviorial finance with a fierce adherence to the tried and tested principles of value-investing. He is always readable, thought-provoking and, above all, correct."
—Edward Chancellor, author of Devil Take the Hindmost: A history of financial speculation
"James' latest effort is a must read. It combines great academic and practitioner approaches written in a humorous and entertaining style. It has practical real world examples that don't require advanced mathematics to comprehend. I advise everyone to read and study this wonderful book. All of my students now have Value Investing: Tools and Techniques for Intelligent Investment to add to their required reading."
—Mark Cooper, Partner at Omega Advisors & Adjunct Professor at Columbia Business School
"A preponderance of evidence shows that successful long-term investing requires a strong value orientation and a proper temperament, virtues commonly blunted by behavioural and incentive-based biases. Montier, a leading light in value investing and behavioural finance, shows you what’s wrong with standard investment thinking and offers important insight into how to improve your process. Read Value Investing, live its lessons, and prosper."
—Michael J. Mauboussin, Chief Investment Strategist at Legg Mason Capital Management, and author of Think Twice: Harnessing the Power of Counterintuition
Preface xi
Foreword xvii
Part I Why Everything You Learned in Business School is Wrong 1
1 Six Impossible Things before Breakfast, or, How EMH has Damaged our Industry 3
2 CAPM is Crap 19
3 Pseudoscience and Finance: The Tyranny of Numbers and the Fallacy of Safety 29
4 The Dangers of Diversification and Evils of the Relative Performance Derby 39
5 The Dangers of DCF 47
6 Is Value Really Riskier than Growth? Dream On 57
7 Deflation, Depressions and Value 65
Part II The Behavioural Foundations of Value Investing 73
8 Learn to Love Your Dogs, or, Overpaying for the Hope of Growth (Again!) 75
9 Placebos, Booze and Glamour Stocks 85
10 Tears before Bedtime 93
11 Clear and Present Danger: The Trinity of Risk 105
12 Maximum Pessimism, Profit Warnings and the Heat of the Moment 113
13 The Psychology of Bear Markets 121
14 The Behavioural Stumbling Blocks to Value Investing 129
Part III The Philosophy of Value Investing 141
15 The Tao of Investing: The Ten Tenets of My Investment Creed 143
16 Process not Outcomes: Gambling, Sport and Investment! 165
17 Beware of Action Man 173
18 The Bullish Bias and the Need for Scepticism. Or, Am I Clinically Depressed? 181
19 Keep it Simple, Stupid 195
20 Confused Contrarians and Dark Days for Deep Value 205
Part IV The Empirical Evidence 215
21 Going Global: Value Investing without Boundaries 217
22 Graham's Net-Nets: Outdated or Outstanding? 229
Part V The 'Dark Side' of Value Investing: Short Selling 237
23 Grimm's Fairy Tales of Investing 239
24 Joining the Dark Side: Pirates, Spies and Short Sellers 247
25 Cooking the Books, or, More Sailing Under the Black Flag259
26 Bad Business: Thoughts on Fundamental Shorting and Value Traps 265
Part VI Real-Time Value Investing 279
27 Overpaying for the Hope of Growth: The Case Against Emerging Markets 281
28 Financials: Opportunity or Value Trap? 291
29 Bonds: Speculation not Investment 299
30 Asset Fire Sales, Depression and Dividends 309
31 Cyclicals, Value Traps, Margins of Safety and Earnings Power 315
32 The Road to Revulsion and the Creation of Value 325
33 Revulsion and Valuation 343
34 Buy When it's Cheap - If Not Then, When? 355
35 Roadmap to Inflation and Sources of Cheap Insurance 361
36 Value Investors versus Hard-Core Bears: The Valuation Debate 371
References 379
Index 383