Professor Aswath Damodaran of the Leonard Stern School of Business at New York University offers on his web site a broad and deep set of financial education materials covering: corporate finance, investment (portfolio) management and valuation. He presents considerable information from his books, such as Investment Philosophies and Investment Fables, including supporting data. For example…
Among the site contents is the manuscript for Investment Fables. It’s a very good introduction to a range of investment styles for new (but diligent) investors and a refresher for experienced ones. In Professor Damodaran’s words:
“While there are literally hundreds of schemes to beat the market in circulation, they are all variants of about a dozen basic themes that have been around for as long as there have been stocks to buy and sell. These broad themes are modified, given new names and marketed as new and different investment strategies by salespeople to a new generation of investors. There must be something in these stories that appeals to investor instincts and to human weaknesses – greed, fear and hubris, to name but three – to give them the staying power that they do. This book is an exploration of the appeal of these stories, why so many fall for them and fail with them, and what it may take to win with each of them.”
The investment styles/myths he tackles include:
High Dividend Stocks: Bonds with Price Appreciation?
This stock is so cheap: The Low Price Earnings Story
Less than Book Value! What a bargain?
Stable Earnings, Better Investment?
In search of excellence! Are good companies good investments?
U.S. Steel, IBM and Microsoft: The Growth Story
The Worst is behind you! The Contrarian Story
The Next Big Thing! New Businesses and Young Companies
Mergers and Returns: The Acquisitive Company
A Sure Thing! No Risk and Sure Profits
Professor Damodaran covers the pluses and minuses of all these investment styles, citing relevant research and modeled results. He shows how to screen a risk-reduced portfolio for each. His organization is very logical, and his writing is exceptionally clear. He makes excellent use of figures and graphs.
