My recommendation is to buy Stephen Penman's textbooks Financial Statement Analysis and Security Valuation. I've re-read it and poured over it years to squeeze every last drop of wisdom. The book is challenging, but it WILL make you money if you are interested in investing. I would say it's the best book I've ever read/worked through on the topic of investing and financial analysis.
The thing they don't teach you, is that B/P works ON AVERAGE because of the few stocks that shoot up, while MOST of the actually FAIL. The distribution is heavily skewed with the bulk of returns being negative and a long "tail" of outperformers. So if one wanted to capture the B/P effect, one would have to invest in all the stocks with a high B/P, or at least a very large chunk of the high B/P universe. This makes it a hard-to-implement, if at all possible, strategy.
Columbia Business School has the worst cameramen/directors ever. They need to focus more time on the projections on the screen whenever the lecturer refers to them. Following him around is like following a fly. It's a distraction.
Very nice lecture. I had to pause and play many times to actually think about it. Value vs Growth are merely labels and are not really useful in investing, and are only useful as a reference during conversation in order to have a common reference. Accounting doesn't write potential profitability only concrete profitability due to accrual accounting methods, and other conservative methods. Technology companies are hard to evaluate. I am not an accountant but I wonder what GAAP vs IFRS would do to the evaluation of certain companies.
TL;DR; value is riskier. It has had a higher historical return because it happened to pay off positively. If you invest in value stocks you take on more risk which you may or may not be compensated for. A much simpler explanation than he gives is that the price is lower than other stocks given future expected earnings therefore it must be riskier. If it wasn’t, people would be willing to pay more to own it.
He is saying that by betting on high B/P and E/P you end up buying a more riskier investment. He proved that using some accounting principles. Most of the video explains the numbers behind the statement.
My recommendation is to buy Stephen Penman's textbooks Financial Statement Analysis and Security Valuation. I've re-read it and poured over it years to squeeze every last drop of wisdom. The book is challenging, but it WILL make you money if you are interested in investing. I would say it's the best book I've ever read/worked through on the topic of investing and financial analysis.
Thank you for the lesson.
Priceless wisdom! So good to see Sir Stephen in 2017. Please, keep posting in future.
Mm-kay?!!
The thing they don't teach you, is that B/P works ON AVERAGE because of the few stocks that shoot up, while MOST of the actually FAIL. The distribution is heavily skewed with the bulk of returns being negative and a long "tail" of outperformers. So if one wanted to capture the B/P effect, one would have to invest in all the stocks with a high B/P, or at least a very large chunk of the high B/P universe. This makes it a hard-to-implement, if at all possible, strategy.
You nailed it! :-)
Well said
I suppose a low-cost value index fund would get the job done.
Columbia Business School has the worst cameramen/directors ever.
They need to focus more time on the projections on the screen whenever the lecturer refers to them. Following him around is like following a fly. It's a distraction.
Thanks for the update on the same lessons
I am deeply enamored by his academic acumen!
Good stuff.
Very nice lecture. I had to pause and play many times to actually think about it. Value vs Growth are merely labels and are not really useful in investing, and are only useful as a reference during conversation in order to have a common reference. Accounting doesn't write potential profitability only concrete profitability due to accrual accounting methods, and other conservative methods. Technology companies are hard to evaluate. I am not an accountant but I wonder what GAAP vs IFRS would do to the evaluation of certain companies.
thanks for the video
It's a good idea value and intesting
Sir, just want to say thanks for the video, and this could have little better. Though, I'm a finance student but I was feeling left out.
TL;DR; value is riskier. It has had a higher historical return because it happened to pay off positively. If you invest in value stocks you take on more risk which you may or may not be compensated for.
A much simpler explanation than he gives is that the price is lower than other stocks given future expected earnings therefore it must be riskier. If it wasn’t, people would be willing to pay more to own it.
Nice lecture 🙏
Isn't growth and value a chain reaction, one or the other happens first then the other steps forward with the other?
And sooooo....
What is a value trap and how do I avoid it?
Re-watch the video again.
He is saying that by betting on high B/P and E/P you end up buying a more riskier investment. He proved that using some accounting principles. Most of the video explains the numbers behind the statement.
great lecturer
nice talk
Soooo... what do I do to appropriately and more profitably make value investments?
Why a heck terminology is inverted, is that an intellectual game? Great content but one has to figure out the inverse of all he says! P/E and P/B!
Simple. It's the reciprocals. If it is 30% empty, it is 70% full.
They changed accounting standards to capitalize R&D now, so it is an asset on the balance sheet.
what's water on the balance sheet?
goodwill and intangibles.
mhmm
13:50 how is 8.7 the reciprocal of 11.5?
I think because the yield at P/E of 11.5 is 8.7%. If PE is 11.5/1, the reciprocal is 1/11.5 = .0869 or 8.7%
yes, with a 11.5 pe you would have 8.7% return in an investment.
“What do we do when we fall Mr. Wayne? M’kay? We learn to pick ourselves back up. M’kay?”- Alfred from Batman
Who's the lady at 28:50? I may have found ... ❤
Can someone do the TL;DW version here? Thanks.
Didn’t expect an Aussie accent
This man is an accountant, not an investor.
When you dissociate the two, you, my friend become neither an investor nor an accountant but a gambler.
@@garhhh9513 idiot
@@garhhh9513 Goodluck retiring without investing your money and it being eaten away by inflation lol
@@garhhh9513 Your comment was extremely insightful, but it seems your audience wasn't having any of it.
This guy sounds like an Aussie
His bio says he hid his undergraduate study at the University of Queensland
Well, I wanna see his track record... Otherwise it's just "interesting" but nothing more.
Uh uh
Dude can't control the volume of his voice.
Umm ummm ummm ahhhh umm ahhh
I can't listen to this anymore, had to turn off the video 2 minutes in
Turn subtitle on and speed up the video
Never trust accountants. Those numbers are available to everyone. Useless lecture for retail investors.
An excellent writer and a terrible lecturer. The way he speaks to the audience, you'd think it was a kindergarten (perhaps that's how he sees it).