Best Investment Books

The Little Book of Value Investing by Christopher H. Browne

Christopher H. Browne's book The Little Book of Value Investing distills his decades of experience into this book that provides insights that can be only obtained by experience.

This is not a book for those looking for a magic (arithmetic or statistical) formula to determine the intrinsic value of stocks.

Focus of the Book

Browne's approach is to look for companies with predictable future earnings rather than to search for specific earnings estimates that stock market analysts provide.

Then his focus is on the cheapest stocks based on earnings that have already been reported.

So he looks for stocks with low P/E ratios and low price to book value.

Book value per share is simply the net worth divided by the number of shares outstanding, where net worth is found by subtracting everything it owes from everything it owns.

He refers to numerous studies that have revealed that buying cheaper, less popular stocks brings far greater returns - and that this holds across industries and developed countries.

"Buy stocks as you would groceries - when they are on sale!"

Advice is provided for people investing during retirement. Browne argues that those who are fortunate enough to have sufficient funds to provide for more than three years of living and short-term expenses should hold the living expenses in cash as a buffer against a market downturn.

The remainder, he suggests, should be invested in domestic and international stocks.

Stock investing, he argues, provides the best long-term returns and protection from inflation. So funds not required for three-years of living expenses when investing after retirement should be invested in this manner.

To Conclude

This book will provide you with examples of many studies that support his arguments.

The book may also help you to develop the temperament and patience to avoid the trap of instant gratification.

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