Book Review -”Do You Really Want To Master Value Investing?”
Datuk HC EU, the author of “Do you really want to master Value Investing” is currently offering his self published e- book free today on Kindle. His book is aimed mainly at newbie investors.
In his introduction the author says he is by profession a mechanical engineer and a self taught investor that started investing about two decades ago. Datuk Eu has an MBA and more than 20+ years in corporate management prior to investing in stocks.
As a former professional stock picker aka investment analyst I normally throw out “how to invest in the stockmarket” books written by amateurs or even by professionals. There are probably hundreds of such books written by professional fund managers and investment analysts every year. I've probably read most of the important books on how to invest in stocks by Graham & Dodd, Peter Lynch, Burton Malkeil, Aswash Damodaran etc. And bought more books on specialist subjects for the sectors I used to cover as a investment analyst: banking, aviation, building materials, hotels and conglomerates.
Does the world need another 450+ page introduction on how to invest? Well, it depends. The book does I think cover the basics of stockmarket investment well ( picking stocks, the importance of diversification to reduce risks) and is written in simple accessible English.
In an age when inflation is now making headlines again, the author makes the important point that stocks have historically outperformed other classes of assets over the long run. And the author also lays out the pathway to newbie investors that want to learn how to analyse the fundamentals of stocks, how to time stock purchases and when is the right time to divest stocks.
But I strongly suspect many individual investors do not have the patience nor the psychological make up to be successful value investors like Datuk Eu. These people should perhaps invest in ASM (Amanah Saham National) or ETF (exchange traded funds). But see Post Script and Disclaimer .
If I were to be a nitpicking critic, I think the author mentions only old white guys like Warren Buffet, George Soros, Peter Lynch etc amongst the list of successful aka billionaire class investors. I do not know why he has left out such luminaries like Korean born but now an American citizen Bill Hwang who is probably the most successful value investor in recent times with a portfolio of US$20bn before losing everything in two days, and Malaysian born Cheah Cheng Hye of Value Partners fame and Tong Kooi Ong of The Edge and previously controlling shareholder of one of Malaysia's most innovative banks.
In his introduction, the author mentions the preservation of capital as one key objective of Value Investing. Perhaps the author has unintentionally left out an important point - a depreciating Ringgit is the main reason why many professional fund managers avoid the KLSE altogether.
With most global stockmarkets in bear territory and more interest rates in the offing (many analysts now expect a jumbo 100 BP hike in interest rates in July) , prospects for the stockmarket in Malaysia do not look exciting. I think it is worth making another point about stockmarket investment by Warren Buffet, the Oracle of Omaha. Many investors make money in bull markets even when they have no skill. They got lucky because “a rising tide floats many boats.” But Buffet noted : You only find out who is swimming naked when the tide goes out. “
Post Script & Disclaimer
Value investing is geared for the long term. Many studies have shown day traders who buy stocks and close out positions at each trading day might lead lives full of excitement. But 95% of day traders will lose money in the long run. Having said that, a cynic once remarked that in the long run, we are all dead.
Datuk Eu and I hold MBAs from the same UK School of Business. But I have tried hard not to be biased in reviewing a book by a fellow alumni. The Times Higher Education newspaper ranked the School of Business at Bradford University as the #1 UK business school 2021.
