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Warren Buffett book
I’ve signed a contract to deliver a book to Harriman House about Warren Buffett. The working title is “The Investment Deals of Warren Buffett: Volume 1, The First $100m”.
The vast majority is written because I wrote it for you guys over the past two years. I feel very fortunate that Harriman House want to publish work I’ve already done!
So if you want to read the story of how Warren Buffett made his millions from a starting point of zero wealth then you can read the older Newsletters.
Alternatively, you could read it in a nicely bound book (properly edited) in about six months from now (it has a bit more material added, but not much).
Corporate Finance Textbook
My first book (20 years ago now) was a university textbook for students studying corporate finance.
I was very lucky – it took off to become a best-seller because there was a dearth of UK focused textbooks.
The fifth edition is getting old, so I’ve agreed to work on the sixth edition in partnership with Deb Lewis (senior teaching fellow at Bath University).
I was determined not to write the whole of the book because that would be a distraction from my most important task of investment analysis and Newsletter writing, so I’m very grateful Deb has agreed to share the burden.
And the relevance to Newsletter readers is……
One of the chapters is titled “Stock Market Efficiency”. This is the notion that you cannot, on a systematic and risk-adjusted basis, out-perform the market, except by chance. The market is “unbiased” in pricing shares.
I’m itching to change the chapter title to “Stock Market Inefficiency”, but the academic community is not yet ready for such a radical notion – and besides, as I conclude in the chapter, mature stock markets ARE generally efficient at pricing shares.
For most people, most of the time, the market should be regarded as efficient. To believe different is to invite higher risk and lower returns.
But “generally” does not mean “always”.
The chapter contains what academics refer to as “anomalies”. In other words anomalous to the doctrine of pricing efficiency.
These are academically robust discoveries which may lead on to the possibility of out-performing the stock market. Regular readers of the Newsletter will already be familiar with the evidence of net current asset value out-performing, or shares with a low cyclically adjusted price earnings ratios doing well, for example.
In preparation for the sixth edition I’ve downloaded dozens of academic papers published in the last four years. Many of these tackle the issue of whether an exploitable inefficiency has been found. In other words, can you out-perform the market by selected a portfolio on the basis of criteria X, Y or Z?
I’ll summarise some of these papers for you, into everyday English………..To read the rest of this article, and more like it, subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
