Fire Your Stock Analyst: Analyzing Stocks On Your Own

A Practitioner's View of Stock Analysis:
Harry Domash, entrepreneurial investor, has laid out methodologies for analyzing stocks that any investor can follow. I would recommend his book to anyone who manages his or her own investments. Everything of importance for stock analysis seems to be covered with descriptions of where to find data and how to manipulate it. Of special interest to myself were his sections on estimating stock values and on determining a business' financial fitness and profitability. In his section on stock valuation he expresses disdain for conventional intrinsic value methods based on discounted earnings flow, claiming that stocks have no intrinsic value other than what someone will pay for them. In their place he offers two alternative methods: (1) implied earnings growth and (2) growth at a reasonable price, (GARP.) In both methods earnings growth is key. For (1) he obtains implied earnings growth from Benjamin Graham's intrinsic value formula by equating that value to current market price and solving for the (implied) growth rate. A reasonable approach but any such valuation formula could be used, including one of the maligned discounted earnings flow formulae. Domash gives no reason for his choice, but Graham's formula is simpler - a questionable criteria in the age of the computer. For (2) earnings growth is obtained from analyst's forecasts. The use of this alternative to his implied earnings growth is unexplained. In his sections on financial fitness and profitability he compiles a collection of recipes for determining both. His `cookbook' approach seems to be the industry practice. (see B. Graham & C. McGolrick, "The Interpretation of Financial Statements") I had hoped for a more logical flow to the process, but since there may not be one Domash can't be faulted for lacking it. Maybe he could develop such a flow for his next edition. In sum, Domash's book left me a bit perplexed, but what I found was comprehensive, informative, useful, interesting, and well worth the price.

One guy's system for evaluating the financial soundness of businesses so it canbe determined if they are undervalued or growing!:
I liked this book very much. But I did not love it. Hence, the 4 star rating. To me the book sounded like a crash course in what is involved in doing due diligence during a merger and acquisition project. People who are interested in learning a lot of what must be done during due diligence will greatly appreciate this book. And I suspect any wanta-be entrepreneur will get a lot out of this book, too. The book is overflowing with content. And I thought it was very logical and pretty straightforward. However, if I really want to get the full benefit this book has to offer me, then I will have to go back and outline each of the chapters. There are just too many asides thrown in during the writing that I feel as though another drafting or two of the book would make a world of difference in how easily it can be read and digested on a first read. Arguably there were too many examples of real companies because they tend to date the book. And the title was off a little for me since all the subscriptions necessary to do what the author suggests can cost a bit. Probably my favorite aspect of the book was all the online resources that were cited and explained to be used as tools when researching and analyzing companies from a value (undervalue) or growth persepective. Certainly this book provides one way (and a good one at that) to look at stock analysis. But there are other takes on this same subject. I recommend someone interested in the subject matter definitely read this one, but also seek out some other tomes, too. 4 stars!

Great book on analyzing stocks on your own..........:
This book is well written, simple and easy steps to analyze any stock traded. It is written in easy language and very simple steps. I use it in my investments class with my college students and I have had great feedback from my students. So much so that many of my students have moved on to banking jobs and they carry this book to their trading desks with them.

The Best and Only Complete Book on Stock Analysis!!:
Domash has done it. This is the book that covers everything you need to know abaout analyzing a stock. And that is what makes the book "the best" book on stock investing. Many say that Graham's Intelligent Investor is the best, but I think it is not, since although valuable all it does is giving you a bunch of screening criteria at the end of the day. This is coming from a person who knows the CFA curriculum inside out!! The book covers many areas from equity valuation to detecting financial shenanigans, from Porter's five forces to technical analysis. Of course, all of these subjects can not be covered in detail in a 300 page book, but beginners will find most of these information quite interesting and valuable. Experts and professionals, on the other hand, will not find a new info on this book, but they will still benefit from the presented methods and the system on analyzing stocks. If I have to add few negative comments here they are: 1- Domash stirictly differentiates between a "value stock" and a "growth stock". So a stock can't qualify to be both. I don't believe any stock investment can be so black and white. 2- Target price forecast: I would like it if Domash also covered DCF valuation models like FCFE and FCFF. But then it would be necessary to explain the concepts such as equity risk premium, WACC, growth assumptions, terminal value. It would have added maybe 30 more pages. Links between balance sheet, income statement, book value, dividends so on.. is not explained. A beginner may find some lose ends reading the book. 3- Forecasting sales and margins requires a little better research I think. By just looking at the trend, analyst forecasts and saying "I am assuming that the company will not grow in 2002 but it will resume its growth in 2003" is not very well justified. But the idea clear only you have to do a better research. 4- I would also like to see financial models done on a spreadsheet for demonstration. This list could go on but then I would be unrealisticly expecting too much from a 300 page book. So I will stop here. Nontheless, I don't say this cliche often, and I say it now. This is a MUST READ for any non-pro individual who is interested in equity analysis.

Excellent reading.:
The Book is exactly correct on what needs to be done. I wonder if Stock Brokers really do all of these things.