This year, the financial markets have perplexed even the most bullish of money managers. Individual investors bold enough to engage in stock picking on their own can get help from The 5 Keys To Value Investing by J. Dennis Jean-Jacques (The McGraw-Hill Cos., $24.95). While this is not a new title, it’s a book rooted in the fundamentals of value investing, principles investors would be wise to apply today to avoid investing in companies with faulty accounting and slipshod management — problems that have afflicted many firms in recent years.
Author Jean-Jacques is a former senior analyst with the Mutual Series funds, the mutual funds managed by legendary value investor Michael Price, who set the standard for value investing during the 1990s. Price’s influence on Jean-Jacques is evident in the many references Jean-Jacques makes to Price’s investment approach throughout the book. This only confirms that the approaches discussed therein are derived from some of the best investment minds in the business.
While the book is not exactly written in laymen’s terms, anyone who has the confidence to select their own stocks should be able to understand its concepts with no problem. In fact, the book highlights investment concepts that most people can understand. For example, Jean-Jacques emphasizes that there is a difference between buying stocks and buying a business. Value investors, he insists, buy businesses, meaning that if you approach your stock purchase as if you were actually going to own the entire company, you would conduct a better analysis of the condition of the business. And you’d try hard to make your purchase at a discount, like most people do when they buy everyday items. Jean-Jacques then goes about the process of showing readers how to select businesses for their portfolio using his Five Keys of Value framework.
The 5 Keys To Value Investing also gives investors a great deal of information on how to assess the true value of a company or an investment opportunity. It has meaningful discussion on understanding how events can work to move stock prices up or down — information that is particularly useful with terrorism and energy prices destabilizing the market every few months. There is also a chapter that shows how to build a portfolio of winning stocks.
The 5 Keys To Value Investing is not for beginners, but it can be very useful for the slightly more sophisticated investor who wants to make better stock selections for his or her investment club or personal portfolio.