For the millions of individual stock investors who want to improve their results-and for beginners who want to get started on the right foot-Sensible Stock Investing: How to Pick, Value, and Manage Stocks is a comprehensive yet easy-to-follow guide.Written for the busy individual, Sensible Stock Investing presents the investment process in three phases: rating companies for their intrinsic soundness; valuing stocks to find advantageous purchase prices; and managing a portfolio once…
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This book stands head and shoulders above the great bulk of what I’ve read on the subject of stock investing. Much of what’s out there these days seems to have been written either for the gullible, get rich quick types or for those who have completely given up on trying to come out ahead of the pack and have resigned themselves to the boredom of simply buying and holding index funds. But this book’s premise is that the small individual investor actually can beat the market, not through some secret, author-discovered formula, but by applying logic, discipline, and a bit of effort. If you believe, as I do, that knowledge and diligence tend to be rewarded in the Market as in life generally, you’re going to like this book.
The author does a great job of smoothly guiding the reader through a potentially dry and difficult subject, without presuming any particular prior knowledge or experience. In fact, the book could almost serve as a textbook on how the stock market operates if it weren’t such a quick and enjoyable read. The contents are well organized, and the writing is clear and to the point. The author effectively uses two real world portfolios to demonstrate the application of his techniques and at the same time buttress his credibility. There are also several helpful appendices, including forms for valuing companies and reviewing a portfolio, as well as a handy investment calendar.
One other thing that makes this book special is the feeling it conveys throughout that stock investing can and should be approached as an engaging, enjoyable hobby, like, say, belonging to a fantasy football league. I think an investor who maintains such an attitude is the most likely to stick with the sound techniques this book espouses while at the same time he or she reaps an extra dividend of happiness.
5.0 out of 5 stars
Understandable, in-depth and detailed
I have been wanting to get back into stock market investing since my 401k has languished along with the rest of the market for years.
5.0 out of 5 stars
Excellent book on stock investing
First, what this book is NOT:
A primer on asset allocation or asset classes other the individual stocks.
I have read a variety of books on investing, but have never before come across one which is so uniquely suited to the individual investor. That may be because the author is “one of us.” He appears to be a successful businessman who taught himself to become a successful investor. He is not from the “Wall Street” industry. Instead, he brings the perspective of the “Main Street” individual.
For example, Van Knapp has created easy-to-use tools to rate companies and their stocks–such as a simple point system which allows companies to be graded against each other. Forms like the one he calls the Easy-Rate sheet make for easy recording of the information. He shows you how to create a Shopping List, and how you should take a step back every few months to look at the stocks you own strategically.
This book is only about stock investing, and that is a plus. There is nothing here about how to manage your 401(k), how to allocate your money among asset classes, or whether to buy annuities. With all the space saved by leaving that information out, Van Knapp has written an amazingly informative book about stocks. Such subjects as how indexes (like the Dow) are computed are covered in simple language–things all investors should know, but usually only have a vague idea about.
Another strength of this book is that it covers portfolio management–meaning topics like how many stocks to own, how diversified they should be, when to buy, and (most important) when to sell. Again, topics that individual investors should be thoroughly familiar with, but often aren’t. Taken together, it all comprises a stock-investing system, one that can give you confidence that you are not just shooting in the dark or bouncing from theory to theory without an overall strategy.
Van Knapp writes in a conversational style that is suitable for beginners or experienced stock investors. He does not talk down. This is the kind of book that you read once and then keep referring to again and again, because the information is so accessible.
Highly recommended.
5.0 out of 5 stars
A system that works
As an investor who believes in many of the valuation techniques of Buffett and Peter Lynch, I was constantly trying to find a way to properly grade a stock.
5.0 out of 5 stars
Relief at Last!
Out of all the investment books I own, “Sensible Stock Investing” is the only book that has finally brought together an understanding of how, what, why, and when a stock should be…
4.0 out of 5 stars
not bad but not great either.
This book provides a cook book approach to evaluating stocks. The concept is good and the approach to applying the concept also good.
The author uses a “points system” to identify potential investment opportunities. Returns on equity and dividend history are given the greatest weight, followed closely by historical and forecast earnings per share. Since the rating system takes multiple factors into account, a low score in one area does not automatically exclude a company from consideration.
Points are also awarded to companies that have compelling stories. Is the company a dominant player in its industry? Does the company have pricing power? Answers to questions like these will begin to narrow the range of possible investment candidates. To assist in that effort, the book includes a “company story” questionnaire that investors will find useful.
For stock valuation, the system looks at historical and projected price/earnings, price/earnings growth (“PEG”) ratios, and dividend yields. Discounted cash flow analysis is not part of the author’s suggested approach, for reasons that the book discusses in some detail.
The book also includes a sample stock watch list and sample worksheets for monitoring portfolio performance and for tracking market indicators, all nicely tailored to meet the requirements of the time-pressed investor.
The section on portfolio management takes an in-depth look at company- and market-related issues that enter into the decision to hold or sell, and examples are used to illustrate key points effectively. There is also discussion of circumstances unique to the individual that may warrant a sell decision, for example, the need to rebalance for diversification purposes.
The author’s suggested guidelines for cutting losses (10% – 15% decline on new purchases) may strike some readers as overly cautious. However, the system allows for (and even encourages) departures from the baseline recommendation in certain circumstances. The system lets you keep things flexible. That’s a good thing in my opinion.
The Introduction to the book refers readers to the author’s web site, which among other things includes a brief overview of the investment approach and book excerpts.
3.0 out of 5 stars
Traditional market analysis
This book covers adequately the task of uncovering underpriced and overpriced stocks. Unfortunately the market has pretty well already made the analysis and current market prices…
5.0 out of 5 stars
Intro to Stock Investing
I enjoyed the book very much. It was great at establishing sound investment advice. After reading the book, & doing other research I decided to leave it to the professionals.
5.0 out of 5 stars
The Best Book On Stocks I have Read So Far!
This is certainly the best book on investing in stocks for the individual that I have read so far. Everything is logically thought out and very clearly explained.
5.0 out of 5 stars
This book does the impossible
The author does a superb job of shedding light on a complex subject in a way that’s immediately accessible to beginners.
5.0 out of 5 stars
Great for someone just starting out
Well written and easy to understand, Knapp explains his point system of rating companies and valuating stock prices.