Expectations Investing : Reading Stock Prices for Better Returns

Expectations Investing : Reading Stock Prices for Better Returns

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  • 製本 Hardcover:ハードカバー版/ページ数 224 p.
  • 言語 ENG
  • 商品コード 9781578512522
  • DDC分類 332.632042


New in paperback. Hardcover was published in 2001. Highly practical, the book provides a strategic framework and corresponding tools for using price-implied expectations (PIE).

Full Description

About 75 percent of active investors consistently deliver returns below those of passive index funds. Why? In part, it's because proven methods for valuing assets are too complex to apply-causing investors to rely on commonly used benchmarks such as current earnings and price-earnings multiples that simply don't reflect how the market prices stocks. Now, leading valuation experts Alfred Rappaport and Michael J. Mauboussin argue that the secret to beating the market stands in plain sight. Embedded in the stock price-the most accessible piece of information in the investment arena-lies all investors need to know about how the market expects a company to perform. By correctly decoding that information, say the authors, investors are on the way to anticipating changes in a company's competitive position that the current stock price doesn't reflect-and making informed buy, hold, or sell decisions before the rest of the crowd. This proven approach, expectations investing, holds the potential to change the rules and improve the odds of the stock selection game forever.The beauty of expectations investing is that it harnesses the power of the market's own tried-and-true pricing model-discounted cash flow-without requiring difficult and often dubious long-term forecasting. Highly practical, the book provides a strategic framework and corresponding tools for using price-implied expectations (PIE) to: Interpret current prices and anticipate revisions in expectations; Monitor signals from managerial actions such as mergers and acquisitions and share buybacks and estimate their impact on shareholder value; and, Devise, adjust, and communicate management strategy in light of shareholder expectations. In addition, a unique expectations infrastructure helps track value creation from the initial triggers that shape performance to the resulting impact on sales, operating profit margins, and investment efficiency. Universally applicable to public companies across the economic landscape, "Expectations Investing" will enable professional investors, analysts, and executives to translate heightened uncertainty into lucrative opportunity.Alfred Rappaport is the Leonard Spacek Professor Emeritus at Northwestern's Kellogg School and is Shareholder Value Adviser to L.E.K. Consulting. He originated the Shareholder Scoreboard for "The Wall Street Journal". Michael J. Mauboussin is a Managing Director and Chief U.S. Investment Strategist at Credit Suisse First Boston. He is also an Adjunct Professor at Columbia Business School. Visit the book's dedicated Web site at: our associated website.

Table of Contents

Greater Expectations: How Investing Differs        xi
from Art Collecting
Peter L. Bernstein
Preface xv
Acknowledgments xix
The Case for Expectations Investing 1 (16)
Active Management: Challenge and 4 (3)
The Expectations Investing Process 7 (1)
The Twilight of Traditional Analysis 8 (6)
Essential Ideas 14 (1)
Appendix: Earnings Growth and Value 15 (2)
Part I Gathering the Tools 17 (50)
How the Market Values Stocks 19 (20)
The Right Expectations 19 (2)
Shareholder-Value Road Map 21 (1)
Free Cash Flow 22 (6)
Cost of Capital 28 (5)
Forecast Period 33 (1)
From Corporate Value to Shareholder Value 33 (1)
Summary Illustration 34 (1)
Essential Ideas 35 (1)
Appendix: Estimating Residual Value 36 (1)
The Perpetuity Method 36 (1)
The Perpetuity-with-Inflation Method 37 (2)
The Expectations Infrastructure 39 (12)
The Expectations Infrastructure 40 (6)
Not All Expectations Revisions Are Equal 46 (3)
Essential Ideas 49 (2)
Analyzing Competitive Strategy 51 (16)
The Dual Uses of Competitive Strategy 51 (1)
Historical Analysis 52 (1)
Competitive Strategy Frameworks 53 (12)
Essential Ideas 65 (2)
Part II Implementing the Process 67 (84)
How to Estimate Price-Implied Expectations 69 (16)
Reading Expectations 71 (2)
Gateway Case Study 73 (3)
Why Revisit Expectations? 76 (1)
Essential Ideas 76 (2)
Appendix: Employee Stock Options and 78 (1)
Expectations Investing
Valuing ESOs 78 (7)
Identifying Expectations Opportunities 85 (20)
Searching for Expectations Opportunities 86 (4)
Pitfalls to Avoid 90 (2)
Gateway Case Study 92 (12)
Essential Ideas 104(1)
Buy, Sell, or Hold? 105(12)
Expected-Value Analysis 105(3)
Gateway Case Study 108(2)
The Buy Decision 110(2)
The Sell Decision 112(2)
The Role of Taxes 114(1)
Essential Ideas 115(2)
Beyond Discounted Cash Flow 117(18)
Real Options 118(7)
When to Use Real-Options Analysis in 125(3)
Expectations Investing
The Value of Real Options in Amazon.com 128(4)
Reflexivity 132(2)
Essential Ideas 134(1)
Across the Economic Landscape 135(16)
Business Categories 136(4)
Business Categories and the Value Factors 140(9)
Essential Ideas 149(2)
Part III Reading Corporate Signals 151(46)
Mergers and Acquisitions 153(18)
How Acquiring Companies Add Value 154(1)
Evaluating Synergies 155(2)
What to Do When a Deal Is Announced 157(11)
Essential Ideas 168(3)
Share Buybacks 171(14)
The Golden Rule of Share Buybacks 173(2)
Four Popular Motivations for Share 175(8)
Essential Ideas 183(2)
Incentive Compensation 185(12)
CEO and Other Corporate-Level Executives 186(5)
Operating-Unit Executives 191(2)
Middle Managers and Frontline Employees 193(2)
Essential Ideas 195(2)
Notes 197(16)
Index 213(10)
About the Authors 223