[.ca] The Five Rules for Successful Stock Investing: ... (ISBN 0471686174)

WHY allow book reviews by those who don't read the book?!:
I was utterly appalled by the sheer stupidity of the book review submitted by 'amodeus1791 from New York City'(28Jan04) - who claims he never read the book, but then he submits a self-admitted ignorant review of this book. I was even more appalled that Amazon allows "non-review" book reviews to be submitted!! Evidently, 'amodeus1791 from New York City' is a terribly un-read, unsophiticated, myopic, arrogant person who is abundantly ignorant of history also. Clearly, 'amodeus1791 from New York City' is the epitome of an example for that insightful maxim "Living is easy with eyes closed - it's understanding all you see." So-called amateurs have made incredible contributions to knowledge in a variety of technologies and sciences in the ecourse of human history. And so-called amateurs have also made incredible millions in the stock market too. It is precisely the discerning amateur eye that has broken ill-fated innummerable mindsets throughout history time and time again. Why? Simply because so-called 'amateurs' aren't afflicted with myopic blinders - or blindfolds as in the case of 'amodeus1791 from New York City'. (You also have to question whether or not a respected research company such as Morningstar would really publish a true & pure 'amateur' on such a subject?) My first recommendation is that all Amazon readers trash ignorant garbage that is spewed off so indiscriminately like that from 'amodeus1791 from New York City'. I also recommend that Amazon refuse to allow "non-review" book reviews to be published on Amazon!! Actually, if you are looking for a variety of perspectives on a very complicated subject that is part science, part gambling, part intuition, and part art - then this book is as good as any other "random walk" before graduating on to the Benjamin Grahams and John Murphys of the world. It is well written, well researched, well organized, and well thought out -- unlike 'amodeus1791 from New York City'. And for that matter - don't place any faith in my review either -just read the book if you are a semi-serious student of the subject. Because if you are a semi-serious student of the subject you'll want a variety of input - and you'll know how to make up your own mind as to what market perspectives suit your style of investing. And by reading the book - you'll know infinitely more about it than 'amodeus1791 from New York City' does!

Handles an intimidating subject artfully:
There are many books on financial statement analysis, and I've bought most of them...being a liberal arts major who is working toward an MBA in Finance, I've found mastering ratios and concepts related to reading company annual reports frustrating and challeging: my brain seemed not to be wired to be competent in this subject matter. However, I find Pat Dorsey's treatment effective in that he uses the concepts in a less intimidating context than other books might, without watering down the content. Can someone read this book and decipher GE's annual statement to the last footnote? Not hardly. It is often said that it's knowing the essential 20% of a subject that is responsible for 80% of one's success, and this book fills this role in understanding that 20%. Further, the chapters breaking out how to modify analyis of different sectors and industries in the market is also helpful to avoid comparing apples to oranges when evaluating stocks and companies. Beyond this book, the next step up from this would be "Analysis for Financial Management" by Higgins.

Good Source of Sector Accounting:
This book does two things well. First, Mr. Dorsey spends time to walk the reader though the "firm value concept" of intrinsic valuation methodolgy. What is important is his summation points that there is no such thing as an exactly correct discounting rate. So, based on that comment, you should begin to question the whole process. I have wrestled with this question for decades and I can attest that just because "I" think the equity is worth x$ there is no way that the market has to agree with me, or Mr. Dorsey. The math exercise is good to learn and understand but it is not a guaranteed way to stock market riches. A point of contention, Mr. Dorsey's methodology elects not to reduce his equity valuation by the amount of long-term debt per share. Many others do, so, leave yourself a big margin of safety. The other value of this book is its second half which is devoted to better understanding the various accounting differences among industry sectors. I welcomed the discussion on operating lease commitments as an off-balance sheet debt obligation. I think what you will find when you crunch the numbers is, most companies are very indebted. The concept of "Enterprise Value" and "Cash Return" is also useful but, it also won't make the market move your way. In summary, a good read with something to teach but certainly it does not make this market speculation look like "investment".

Watch out for mathematical errors:
Great book on investing. The book covers information you would normally have to search in many places for. There are errors in the perpetuity formula on page 150 and the multiple used for discounting on page 144 should be 1.1449 no 1.449.

Insightful!:
The best investing principles, as clearly reiterated here, are stable and evergreen. As an investor, you'll welcome author Pat Dorsey's unambiguous, straightforward presentation of the always valid wisdom of the markets. This conveniently organized book offers several chapters of general relevance to investors in all markets and industries, including an industry-by-industry examination of the determinants of value. The title is cute, but the content isn't about the title's rules - it is about learning and obeying the basics of stock investing. We recommend the author's long term perspective. Many of the directions he sets for potential investments could still be valid years hence.