Details

Active Value Investing

Making Money in Range-Bound Markets
Wiley Finance, Band 293 1. Aufl.

von: Vitaliy N. Katsenelson
36,99 €
Verlag:	Wiley
Format:	EPUB
Veröffentl.:	15.06.2012
ISBN/EAN:	9781118428832
Sprache:	englisch
Anzahl Seiten:	304

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Beschreibungen

Titelbeschreibung

A strategy to profit when markets are range bound–which is half of the time One of the most significant challenges facing today’s active investor is how to make money during the times when markets are going nowhere. Bookshelves are groaning under the weight of titles written on investment strategy in bull markets, but there is little guidance on how to invest in range bound markets. In this book, author and respected investment portfolio manager Vitaliy Katsenelson makes a convincing case for range-bound market conditions and offers readers a practical strategy for proactive investing that improves profits. This guide provides investors with the know-how to modify the traditional, fundamentally driven strategies that they have become so accustomed to using in bull markets, so that they can work in range bound markets. It offers new approaches to margin of safety and presents terrific insights into buy and sell disciplines, international investing, "Quality, Valuation, and Growth" framework, and much more. Vitaliy Katsenelson, CFA (Denver, CO) has been involved with the investment industry since 1994. He is a portfolio manager with Investment Management Associates where he co-manages institutional and personal assets utilizing fundamental analysis. Katsenelson is a member of the CFA Institute, has served on the board of CFA Society of Colorado, and is also on the board of Retirement Investment Institute. Vitaliy is an adjunct faculty member at the University of Colorado at Denver - Graduate School of Business. He is also a regular contributor to the Financial Times, The Motley Fool, and Minyanville.com.

Inhaltsverzeichnis

Preface xiii PART ONE What the Future Holds CHAPTER 1 Introduction: Range-Bound Markets Happen 3 Fasten Your Seat Belts and Lower Your Expectations 3 Let’s Identify the Animal 4 Secular versus Cyclical 4 Distinction between Secular Bull, Bear, and Range-Bound Markets 6 Is 100 Years Long Enough? 7 Stocks Carried the Torch in the Long-Run Marathon 8 International Stocks Were Bright Lights, Too 10 Will Gold Shine Again? 11 Gold’s Recently Emerged Competition 13 The Deception of the Long Run (Marathon) 14 Range-Bound Markets Erode Bull Market Returns 15 The Long Run for Us May Be Shorter Than We Think 17 CHAPTER 2 Emotions of Secular Bull, Bear, and Range-Bound Markets 23 Bull Market Euphoria 23 Bear Market Doldrums 25 What Does a Secular Range-Bound Market Feel Like? 29 Volatility of Bull and Range-Bound Markets 31 CHAPTER 3 Stock Market Math 37 Sources of Capital Appreciation: Earnings Growth 38 Sources of Capital Appreciation: Price to Earnings 48 Sources of Dividend Yield 57 Why Range-Bound Markets Follow Bull Markets 61 It Is Not Over Until It Is Over 62 CHAPTER 4 Bonds: A Viable Alternative? 67 Why Not Bonds? 67 Asset Allocation Role Is Diminished in Range-Bound Markets 69 PART TWO Active Value Investing ANALYTICS Introduction to Analytics: The Quality, Valuation, and Growth Framework 77 CHAPTER 5 The ‘‘Q’’—Quality 79 Competitive Advantage 79 Management 82 Predictable Earnings 89 Strong Balance Sheet 91 Significance of Free Cash Flows 95 High Return on Capital 102 Conclusion 102 CHAPTER 6 The ‘‘G’’—Growth 103 Sources of Growth: Earnings Growth and Dividends 103 Past Has Passed 111 Future Engines of Growth 112 Dividends 114 Growth Matters—A Lot! 117 CHAPTER 7 The ‘‘V’’—Valuation 119 Tevye the Milkman’s Approach to Valuation 119 Review of Relative Valuation Tools 128 Absolute Valuation Tools—Discounted Cash Flow Analysis 132 Relative versus Absolute Tools 134 Absolute Models Overview 136 The False Precision of Math 137 Absolute P/E Model 139 Discount Rate Model 148 Margin of Safety Model 151 The Marriage of Absolute P/E and Margin of Safety 155 Bring Out the Toolbox 155 The P/E Compression and How to Deal with It 157 CHAPTER 8 Let’s Put It All Together 165 The Added Clarity 165 One Out of Three Is Not Enough 165 Two Out of Three Is Better, But Is It Enough? 167 Conclusion 174 STRATEGY Introduction to Strategy: The Value of Process and Discipline 177 CHAPTER 9 Buy Process—Fine-Tuning 179 The Value of the Process and Discipline 179 Think Long-Term, Act Short-Term 181 Meet Your New Best Friend—Volatility 182 Time Stocks, Not the Market 183 Cash Is King 185 Be Ready to Strike When the Time Comes 186 CHAPTER 10 Buy Process—Contrarian Investing 187 Contrarian Is the Name of the Game 187 You Don’t Have to Own It 189 Be a Myth Buster 190 Quantify Everything and Be a Contrarian Headline Investor 191 Time Arbitrage 192 Finding New Ideas 193 Do In-Depth Primary (Your Own) Research and Document It 200 CHAPTER 11 Buy Process—International Investing 201 The World Has Flattened: Hola, Bonjour, Guten Tag, Buon Giorno to the Rest of the World 201 Same Difference 202 Location of Corporate Headquarters Abroad May Not Constitute a Foreign Company 203 You Are Exposed to More Foreign Political Risk Than You Realize 204 What About the United States? 205 Pick Your Comfort Zone and Go from There 206 Don’t Confuse a Fast-Growing Economy and a Good Investment 207 Currency Risk 207 How Much Is Too Much? 208 Conclusion 209 CHAPTER 12 Sell Process—Make Darwin Proud 211 Selling When Stock Price Has Gone Up 212 Selling When Fundamentals Have Deteriorated 215 Conclusion 221 RISK AND DIVERSIFICATION Introduction to Risk and Diversification 225 CHAPTER 13 A Different View of Risk 227 What Is Risk? 227 Properties of Randomness 228 The Crocodile Hunter, Randomness, and Investing 229 Understand the Linkage Between and Inside QVG Dimensions 234 Identify Impact of Randomness on Value Creators 235 The Cost of Being Wrong 238 Conclusion 239 CHAPTER 14 A Different View of Diversification 241 Don’t Bet the Farm! 242 Too Many Eggs or Too Many Baskets 243 Mental Accounting and Diversification 244 Mental Accounting and Randomness in a Stock Portfolio 246 Randomness Could Be Your Friend 248 CHAPTER 15 Conclusion and Implication 251 I Could Be Wrong, But I Doubt It 251 Bull Markets 252 Bear and Range-Bound Markets 253 Bonds? 255 No, I Am Not Wrong 256 Appendix—Years to Bull Market 257 Acknowledgments 267 Notes 273 Index 275

Rezension

Katsenelson's is straightforward enough to keep a rookie investor engaged, and in-depth enough to retain the interest of old pros, which makes this a great book for those of all skill levels. He does a comprehensive job of reviewing the market's past, projecting its potential future, and developing a case for why value investing will shine as the market stagnates. He combines historical and financial analysis, along with engaging stories from his experience as a professional investment manager.--Chuck Saletta, Motley Fool This book should be considered a practical compendium of modern finance, leaving no stones unturned on your way to better investments. Katsenelson’s passionate, witty and accessible writing expertly takes the reader through his original framework for valuing stocks in range-bound markets. A student of history and an overzealous stock picker, the author entertainingly illustrates every concept with a collection of real-world examples, demonstrating an impressive breadth and depth of understanding of what makes stocks move!--J.P. Tremblay, CFA "How to adapt value investing for "range-bound" markets." (Financial Times, Tues 26th February 2008) "The new Benjamin Graham is Vitaliy N. Katsenelson. I highly recommend Katsenelson's book, Active Value Investing: Making Money in Range-Bound Markets (Wiley, 2007). I like to think the old Ben Graham would have recommended it, too."--Forbes

Autorenportrait

VITALIY N. KATSENELSON, CFA, has been involved with the investment industry since 1994. He is a portfolio manager with Investment Management Associates, where he comanages institutional and personal assets utilizing fundamental analysis. He is also an adjunct faculty member at the University of Colorado at Denver, Graduate School of Business. Katsenelson is a regular contributor to the Financial Times, MarketWatch from Dow Jones, and Minyanville.com. He is a CFA charter holder, member of CFA Institute, has served on the boards of the CFA Society of Colorado, and is currently on the board of the Retirement Investment Institute. Katsenelson received both his bachelor of science and his master of science in finance from the University of Colorado at Denver, where he graduated cum laude. To read articles Katsenelson has written over the years, please visit: ContrarianEdge.com or ActiveValueInvesting.com

Back cover copy

"The new Benjamin Graham is Vitaliy N. Katsenelson. I highly recommend Katsenelson's book, Active Value Investing: Making Money in Range-Bound Markets. I like to think old Ben Graham would have recommended it, too." —Forbes Active Value Investing For the next dozen years or so, the U.S. stock market will be a wild roller-coaster ride—setting all-time highs and multi-year lows in the process. While the twists and turns of this ride are still to be written by history, the long-term, sideways "range-bound" trajectory has already been set by the eighteen-year bull market that ended in 2000. When the dust settles, only those who adapted their investment strategies to this range-bound market will have captured any meaningful profits. Nobody understands this situation better than author, educator, and respected investment manager Vitaliy Katsenelson. And now, with Active Value Investing, he'll reveal how to achieve unparalleled success in these conditions by taking traditionally profitable and fundamentally driven strategies—developed during the eighteen-year bull market—and modifying them for use in range-bound markets. This is not just another value investing book. It is a practical guide that contains innovative insights and timely techniques that will improve your investment endeavors during a time when others will be paying with their returns, and with lost time, for the valuation excesses of prior bull markets. In the first part of the book, Katsenelson examines the historical performance of U.S. markets over the past two centuries and discusses what has caused prolonged bull, bear, and range-bound markets. He then looks at the emotions that have dominated each of these markets, why there is a high probability that a range-bound market has descended on us, and what you can do to forecast how long this market will last. Part Two of Active Value Investing addresses practical application of this concept. Here you'll become familiar with performing proper stock analysis—from identifying what constitutes a good company to determining the stock price at which these companies become worth owning—and implementing an active investing strategy during range- bound markets. You'll also be introduced to the Quality, Valuation, and Growth (QVG) framework, which lies at the core of this approach. Rounding out this section are detailed discussions of the buy/sell process as well as complete coverage of important risk and diversification issues. Range-bound markets may be difficult to invest in, but with Active Value Investing as your guide, you'll quickly learn how to squeeze real profits out of a difficult market full of exhilarating highs and surprising lows.