What he does is very simple and nothing complicated, high school math and calculators on his website give you the numbers to arrive at the intrinsic value of a company (which is not the stock price). Here are 3 businesses that I calculated being undervalued now. Once you get the hang of it, it takes few minutes to arrive at the valuation.

PCU
HD
STLD

What it focuses on is that you try to make at least 15% a year return on your investment and if you could do that, you would be making lots of money. That 15% is very conservative , you can do lot more. It also tells you to trade with Technical indicators with the market. That is you don’t sit there like sheep and get slayed when the stocks are being sold. Its tells you to exit and wait for another good entry.

Problem is people don’t know how to value a company what its worth, not what the stock price is. Stock price can be seriously misaligned. Dhando Investor and Little Book seriously disappointed me. I wanted to know how to fish on my own.

Hidden reality, I had mentioned earlier, is not an easy book. I have successfully used pregnant butterfly trade many times and I have a full trading plan devoted to just that strategy. It’s all about concepts and once those are cleared, I don’t think it’s then so complicated. OSI by Larry is also a great book. No second thoughts.

Little book and Dhandho. I think it provides a good framework. Little book works on two simple parameters Earnings Yield and Return on Capital and ranking stocks based upon that. There are tons of websites where from one can make good use of this.

Valuing business is an art as well as science, and everybody has their own way of doing research. Warren Buffets’s methodology is no secret, thousands of books have been written, but still there is no other Warren Buffet (yeah some potential candidate, but still a long way to go). There are even web-sites which can automatically calculate “Intrinsic Value” of the business, but I don’t think an intelligent investor will invest just based on that. It’s a starting point.

So these are frameworks that provides concepts, IMHO. The “Art” is still up-to individual.

Cheers, Profitable Investing.

I downloaded the first chapter for free. Its a nightmare of a read. Its not something you can understand or follow unless you are a pit trader or some kind of an Option whacko. Its a hard read. Nice graphs etc and some exotic option strategies such as SKIP STRIKE BUTTERFLIES and PREGNANT BUTTERFLIES where 2000 butterflies are embedded in the trades!

I mean do you want to get that complicated and entangled in exotic stuff that you lose sight of making money? I did not order this book, as it may be just too hard on my digestive system.

In lieu of that, if one uses ” OPTIONS AS A STRATEGIC INVESTMENT” by Larry McMillan he can pretty much do a very good job of understanding various strategies and won’t throw up digesting these things.

DHANDO INVESTOR: This another great book, tells you all about buying business at 50 cents, but witholds information how you can fish on your own. You need to become authors lackey or join his fund to find out!

RULE#1 by PHIL TOWN: Delivers exact hands on methodology so you can value a business withing minutes from MSN Money and the free websites and go fishing on your own. Written by a Warren Buffet devotee, shows you how Warren Buffet does his calculations and numbers.

You won’t need the author or the book to depend on. I guess I like to fish on my own and its a highly suitable read. Very detailed, very easy read , and gets down to small details and nuts and bolts.

This book leaves other books in the dust.