Expectations Investing: Reading Stock Prices for Better Returns, Revised and Updated (Heilbrunn Center for Graham & Dodd Investing Series)

Most investment books try to assess the attractiveness of a stock price by estimating the value of the company. __Expectations Investing__ provides a powerful and insightful alternative to identifying gaps between price and value. Most investment books try to assess the attractiveness of a stock price by estimating the value of the company. Expectations Investing provides a powerful and insightful alternative to identifying gaps between price and value. Michael J. Mauboussin and Alfred Rappaport suggest that an investor start with a known quantity, the stock price, and ask what it implies for future financial results. After showing how to read expectations, Mauboussin and Rappaport provide a guide to rigorous strategic and financial analysis to help investors assess the likelihood of revisions to these expectations. Their framework traces value creation from the triggers that shape a company's performance to the impact on the value drivers. This allows a practitioner of expectations investing to determine whether a stock is an attractive buy or sell candidate. Investors who read this book will be able to evaluate stocks of companies in any sector or geography more effectively than those who use the standard approaches of most investors. Managers can use the book's principles to devise, adjust, and communicate their company's strategy in light of shareholder expectations. This revised and updated edition reflects the many changes in accounting and the business landscape since the book was first published and provides a wealth of new examples and case studies. "Expectations investing is a stock-selection process that uses the market's own pricing model, the discounted cash flow model, with an important twist. Rather than forecast cash flows, expectations investing starts by reading the expectations implied by a company's stock price. This work builds on chapter 7 in coauthor Al Rappaport's seminal book, Creating Shareholder Value, called "Stock Market Signals to Management." That chapter told executives that they needed to be able to read the expectations built into the stock price of their company in order to understand how to generate superior stock price performance. Expectations Investing tailors that message to investors. The book is unique because rather than calculating a value for a business, as most investment books and textbooks suggest, expectations investing provides the tools to understand the expectations embedded in share price and to judge whether those expectations are reasonable. Gaps between fundamentals and expectations create opportunities to buy or sell a stock. This revised and updated edition will contain new frameworks, data, and case studies that reflect how these ideas still apply in today's investing world, which has changed greatly since the first edition's publication in 2001"-- Provided by publisher