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Investment Philosophies: Successful Strategies and the Investors Who Made Them Work, 2nd Edition

Book Description

The guide for investors who want a better understanding of investment strategies that have stood the test of time

This thoroughly revised and updated edition of Investment Philosophies covers different investment philosophies and reveal the beliefs that underlie each one, the evidence on whether the strategies that arise from the philosophy actually produce results, and what an investor needs to bring to the table to make the philosophy work.

The book covers a wealth of strategies including indexing, passive and activist value investing, growth investing, chart/technical analysis, market timing, arbitrage, and many more investment philosophies.

  • Presents the tools needed to understand portfolio management and the variety of strategies available to achieve investment success

  • Explores the process of creating and managing a portfolio

  • Shows readers how to profit like successful value growth index investors

  • Aswath Damodaran is a well-known academic and practitioner in finance who is an expert on different approaches to valuation and investment

This vital resource examines various investing philosophies and provides you with helpful online resources and tools to fully investigate each investment philosophy and assess whether it is a philosophy that is appropriate for you.

Table of Contents

  1. Cover
  2. Series
  3. Title Page
  4. Copyright
  5. Chapter 1: Introduction
    1. WHAT IS AN INVESTMENT PHILOSOPHY?
    2. WHY DO YOU NEED AN INVESTMENT PHILOSOPHY?
    3. THE BIG PICTURE OF INVESTING
    4. CATEGORIZING INVESTMENT PHILOSOPHIES
    5. DEVELOPING AN INVESTMENT PHILOSOPHY
    6. CONCLUSION
  6. Chapter 2: Upside, Downside: Understanding Risk
    1. WHAT IS RISK?
    2. EQUITY RISK: THEORY-BASED MODELS
    3. ASSESSING CONVENTIONAL RISK AND RETURN MODELS
    4. EQUITY RISK: ALTERNATIVE MEASURES
    5. EQUITY RISK: ASSESSING THE FIELD
    6. DEFAULT RISK
    7. CONCLUSION
  7. Chapter 3: Numbers Don’t Lie—Or Do They?
    1. THE BASIC ACCOUNTING STATEMENTS
    2. ASSET MEASUREMENT AND VALUATION
    3. MEASURING FINANCING MIX
    4. MEASURING EARNINGS AND PROFITABILITY
    5. MEASURING RISK
    6. DIFFERENCES IN ACCOUNTING STANDARDS AND PRACTICES
    7. CONCLUSION
  8. Chapter 4: Show Me the Money: The Basics of Valuation
    1. INTRINSIC VALUE
    2. RELATIVE VALUATION
    3. VALUING AN ASSET WITH CONTINGENT CASH FLOWS (OPTIONS)
    4. CONCLUSION
  9. Chapter 5: Many a Slip: Trading, Execution, and Taxes
    1. THE TRADING COST DRAG
    2. THE COMPONENTS OF TRADING COSTS: TRADED FINANCIAL ASSETS
    3. TRADING COSTS WITH NONTRADED ASSETS
    4. MANAGEMENT OF TRADING COSTS
    5. TAXES
    6. CONCLUSION
  10. Chapter 6: Too Good to Be True? Testing Investment Strategies
    1. WHY DOES MARKET EFFICIENCY MATTER?
    2. EFFICIENT MARKETS: DEFINITION AND IMPLICATIONS
    3. BEHAVIORAL FINANCE: THE CHALLENGE TO EFFICIENT MARKETS
    4. A SKEPTIC’S GUIDE TO INVESTMENT STRATEGIES
    5. CONCLUSION
  11. Chapter 7: Smoke and Mirrors? Price Patterns, Volume Charts, and Technical Analysis
    1. RANDOM WALKS AND PRICE PATTERNS
    2. EMPIRICAL EVIDENCE
    3. THE FOUNDATIONS OF TECHNICAL ANALYSIS
    4. TECHNICAL INDICATORS AND CHARTING PATTERNS
    5. CONCLUSION
  12. Chapter 8: Graham’s Disciples: Value Investing
    1. WHO IS A VALUE INVESTOR?
    2. THE PASSIVE SCREENER
    3. THE CONTRARIAN VALUE INVESTOR
    4. ACTIVIST VALUE INVESTING
    5. CONCLUSION
  13. Chapter 9: The Allure of Growth: Small Cap and Growth Investing
    1. WHO IS A GROWTH INVESTOR?
    2. PASSIVE GROWTH INVESTING
    3. ACTIVIST GROWTH INVESTING
    4. CONCLUSION
  14. Chapter 10: Information Pays: Trading on News
    1. INFORMATION AND PRICES
    2. TRADING ON PRIVATE INFORMATION
    3. TRADING ON PUBLIC INFORMATION
    4. IMPLEMENTING AN INFORMATION-BASED INVESTMENT STRATEGY
    5. CONCLUSION
  15. Chapter 11: A Sure Profit: The Essence of Arbitrage
    1. PURE ARBITRAGE
    2. NEAR ARBITRAGE
    3. SPECULATIVE ARBITRAGE
    4. LONG/SHORT STRATEGIES—HEDGE FUNDS
    5. CONCLUSION
  16. Chapter 12: The Impossible Dream? Timing the Market
    1. MARKET TIMING: PAYOFFS AND COSTS
    2. MARKET TIMING APPROACHES
    3. THE EVIDENCE ON MARKET TIMING
    4. MARKET TIMING STRATEGIES
    5. MARKET TIMING INSTRUMENTS
    6. CONNECTING MARKET TIMING TO SECURITY SELECTION
    7. CONCLUSION
  17. Chapter 13: Ready to Give Up? The Allure of Indexing
    1. THE MECHANICS OF INDEXING
    2. A HISTORY OF INDEXING
    3. THE CASE FOR INDEXING
    4. WHY DO ACTIVE INVESTORS NOT PERFORM BETTER?
    5. ALTERNATIVE PATHS TO INDEXING
    6. CONCLUSION
  18. Chapter 14: A Road Map to Choosing an Investment Philosophy
    1. A SELF-ASSESSMENT
    2. FINDING AN INVESTMENT PHILOSOPHY
    3. THE RIGHT INVESTMENT PHILOSOPHY
    4. CONCLUSION
  19. Index