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Buffett and Beyond: Uncovering the Secret Ratio for Superior Stock Selection, + Website, 2nd Edition

Book Description

Construct a portfolio that is sure to outperform market averages

Warren Buffett had it right all along. Now it's your turn to learn how to construct a portfolio that is sure to outperform the market averages, as well as almost every professional money manager in the world. Warren Buffett's method of predictability can determine a future target price, which in turn determines his all-important purchase price. However, Buffett doesn't draw conclusions of his predictability method relative to the future total returns of portfolios. That's where Buffett and Beyond comes in, taking Buffett's method one giant step beyond, proving that if you select a portfolio of stocks using the predictability method in this book, you will outperform 96% of professional money managers over the long term.

In addition to the information in the book, readers will have access to a password-protected website that includes tutorial videos, PowerPoint slides, free trial access to a video newsletter, and a trial subscription to the author's computer program, which follows the research presented in the book.

  • Explains Clean Surplus Accounting (CSA) to determine Return on Owners' Equity (ROE)

  • Uses CSA to determine ROE in a unique way to verify Buffett's all-important purchase price

  • Draws conclusions between Clean Surplus Return on Equity and future total returns

  • Shows that every portfolio selected from the S&P 500 index with above-average Clean Surplus ROEs outperformed the S&P average during the test periods from 1987 to the present

  • If you're an investor, this book will impact your financial life forever.

    Table of Contents

    1. Cover Page
    2. Title Page
    3. Copyright
    4. Dedication
    5. Contents
    6. Preface: From Then Until Now
      1. A Dividend Income and Growth Portfolio
    7. Introduction: A Sea Story
      1. Luck
      2. The Academic World
      3. Risk
      4. The Doctoral Degree
    8. Chapter 1: The Purpose of This Book—Your Journey
    9. Chapter 2: About Warren Buffett
    10. Chapter 3: Determining the Earning Capacity of a Company (Now Really, Can It Be This Easy?)
      1. The Beach Factor
      2. Clean Surplus
      3. Determining an Efficient Company
      4. Take Your Bank Account
      5. Bonds
      6. Earning Capacity
      7. How to Determine the Operating Efficiency of a Company
      8. Sooo Important
      9. You See … ROE Tells Us Everything
      10. Let's Ask Warren
      11. Summary—the Key to the Investing Business
      12. Why Hasn't the Entire World Figured This Out Yet?
      13. You Will Learn
    11. Chapter 4: My Theory of Why Most Money Managers of the World Cannot Outperform the Market Averages
      1. My Contest—Beware How You Select the Random Portfolio
      2. One Step Beyond Buffett
      3. You Don't Have to Worry
      4. Fun with Our Portfolio Reviews
      5. In Summary
    12. Chapter 5: A Very Simple Income Statement and an Even Simpler Balance Sheet
      1. The Income Statement
      2. The Balance Sheet
      3. Tying Together the Income Statement and Balance Sheet
    13. Chapter 6: The Return on Equity Ratio
      1. This Chapter and the Next and the Next
    14. Chapter 7: The Return Portion of the Return on Equity Ratio
      1. The Income Statement: Return
    15. Chapter 8: The Equity Portion of the Return on Equity
      1. Earnings
      2. Accounting Statements and the Link Between Them
      3. The General Motors Story
      4. The Central Flaw of Traditional Accounting
      5. Let's Not Forget the Main Question
      6. Addendum to The General Motors Story
    16. Chapter 9: How to Determine an Equitable Equity Number
      1. Let's Review Just a Bit
      2. Our New Return on Equity Equation
      3. What Does Warren Buffett Say About All This?
    17. Chapter 10: The Predictability of Finance Valuation Models
      1. Efficiency Is the Key
      2. College and Finance Valuation Models—They Just Don't Work Very Well
    18. Chapter 11: Clean Surplus ROE—the Only Comparable Efficiency Ratio
      1. Clean Surplus
      2. I Forget, What Are We Looking For? Let's Review!
    19. Chapter 12: What Buffett Looks for in a Company, or How Clean Surplus Accounting Recognizes the Quality of a Company
      1. Buffett
      2. The Consumer Monopoly versus the Commodity Type of Business
      3. The Commodity Type of Business: Companies Buffett Avoids
      4. The Consumer Monopoly: The Type of Business Buffett Loves
    20. Chapter 13: General Electric Then and Now
      1. The Purchase Price
      2. Back to Basics
      3. A Very Important Point
      4. Back to the Good Bank
      5. The Account of Bank B
      6. Beware, Beware, Beware
      7. A Real Stock
      8. The P/E Ratio
      9. Back to the Future
      10. Let's Discount Back—the All Important Purchase Price
      11. Important Note: Approximately
      12. Very Important Addendum
    21. Chapter 14: General Motors Then and Now
      1. Let's Look at General Motors
      2. High ROE
      3. Consistency Up to 2002
      4. Compare
      5. The Blind Kid—A Sea Story
      6. A Lesson to Be Learned
      7. So You See, Folks
      8. Addendum to the General Motors Saga
    22. Chapter 15: The Beginning: The Initial Research
      1. Why Work with the Dow 30?
      2. Constructing the Portfolio: My First Research into Clean Surplus
      3. Methodology
      4. 1987: The Year of the Anomaly
      5. Buffett the Anomaly
      6. More Parameters: The Simple Rules
      7. The Test Period Parameters
      8. The Results
      9. Compounded Returns
      10. Is There a Correlation Between the Roes and the Returns?
      11. Getting Published in an Academic Journal
    23. Chapter 16: Continuing Research: The Doctoral Research on the S&P 500
      1. Finally, a Lead for Clean Surplus Accounting—Buffett, Graham, Ohlson
      2. The Results of the Research
      3. Methodology
      4. Notice the Difference
      5. Standardized Against the Market
      6. Portfolio Construction
      7. Results: First Test Period
      8. Results: Second Test Period
      9. Bias
      10. Summary of Results
    24. Chapter 17: Rules for Structuring a Great Growth Portfolio
      1. Debt
    25. Chapter 18: Great, Great Job, But You're Fired
      1. A New Definition
      2. The Research Begins
      3. The First Class
      4. To Teach or Not to Teach?
    26. Chapter 19: Stocks on Our Radio Show
      1. Back in 2012
      2. The Structure of This Report
    27. Chapter 20: Stories of Audience Hecklers
      1. The Know-It-All Half-Back
    28. Chapter 21: A Great Dividend Income and Growth Strategy—Part I: The Economic Spectrum of Dividend Stocks
      1. Portfolio Parameters
      2. The Four Stages of the Business Life Cycle
      3. The Maturity Stage
    29. Chapter 22: A Great Dividend Income and Growth Strategy—Part II: Selecting Stocks That Are Growing Their Dividends for Our Portfolio
    30. Chapter 23: A Great Dividend Income and Growth Strategy—Part III: Selecting Stocks That Are Growing in Price for Our Portfolio
      1. Philip Morris International
      2. AT&T
      3. A Pretty Good Portfolio Stock
    31. Chapter 24: Enhanced Income
      1. Covered Option Writing
      2. What Does This Have to Do with Options?
      3. What? Give Up My Stock? Shame on You!
      4. A Bit of Technical Analysis
    32. Chapter 25: Portfolio Insurance
      1. What Does Buffett Do?
      2. So What Can We Do?
      3. Ok, So What Can We Do to Take the Guessing out of Investing?
      4. The Amazing Thing About Portfolio Insurance
      5. Market Crash Mentality
      6. Back to the Crash Mentality
      7. Which Scenario Do You Prefer?
      8. How Do We Insure Our Portfolios?
      9. Cash, Cash, Cash
      10. But How Much Cash?
      11. What Do We Mean by Market Conditions?
    33. Chapter 26: What Have You Learned? A Summary
      1. Dividend Income and Growth Strategy
      2. Portfolio Insurance and Enhanced Income
      3. Putting the Odds of Success on My Side
    34. Chapter 27: We Won't Leave You Out There Alone
      1. www.BuffettandBeyond.com
      2. The Weekly Video
      3. The Computer Program
      4. Tutorial Videos
      5. For Individual Investors
      6. For Professional Money Managers, Wealth Managers, and Investment Advisors
    35. About the Author