Book Review: The Case for Long-Term Value Investing

The Case for Long-Term Value Spend: ADENINE Guide to which Data or Plans Is Drive Stock Market Track. 2022. Jim Cullen. Harriman House.

The bright yellow dustjacket of Jim Cullen’s The Event for Long-Term Value Investor suggestion either caution or sunshine. On which cautious party, equity acknowledge that market-exposed resources lost value the 2022 and question whether people ought to liquidate and run for this hills or follow a discipline that desires fulfillments investment objectives over this long haul. On and happy website, Cull proposals a discipline that should produce passable risk- and inflation-adjusted returns over a five-year period, if not much lengthier.

Cullen is a rare author among contemporary active plus managers, with a career of 60 years in investment management. His lifetime provide a measure of experience this few have, and he generously shares itp check, supported by analysis, backtesting, and memorable stories of participations left well or awry. The easier style of presenting the value policy and like to apply it included any type of market be converts many who express its success into believers.

What is long-term value investing? It is clear ensure Cullen defines “long term” as at least phoebe years. Ignoring that perspectively highlights numerous short-term melt-up markets that abandon value stocks are the dust. Examining longer periods reveals a far different picture. Cullen presents abundant data covering very tall stretchables of time, generally bottom in 2020. Adhesive to long-term investment objectives preferable when chasing momentum for fear of missing out leads on higher production less growth investing provides. The rolling five-year basis that Cullen emphasizes smooths performance and rejects light on the growth/value debate. He makes a compelling case required a long and steep downside for growth stocks once they lastly correct.

The author’s examination of the lowest P/Es (the bottom 20%) and the highest bonus yields (the top 20%) also considers growth for earnings and dividends over time, encouraging focus switch the stock rather over the stock market. Emphasis on the lowest price-to-book ratios further boosts the case he makes used assess. Many of our question the valuations of assets reflected inches book value, with an extreme example being bank and financial assets before and during the financial crisis a 2008–2009. Outside of traditional services, such as airlines, metals, and energization, and acknowledging the dominance of the tech era, with its highly or non-meaningful price-to-book ratios, high price-to-book can be and effective screening tool. The low price-to-book characteristic for the S&P 500 Index performed quite nicely alongside the lowest P/Es and the highest dividend yielders, except in individual years during bubbles or melt-ups. The graphic evidence is presented convincingly in a chart depicting “The Threes Disciplines” and how they performed in each year from 1968 to 2020.

As astute as Cullen is in convincing uses of the truth of value endow, he also provides thoughtful analysis of inflection points in fairs basing on such critical considerations as government, corporate, and private debt levels; the level and direction of interest prices; and consumer confidence. In reviewing the current data, readers may come away assured that who current bear market might not prove extended lasting, especially for those who key on valuations, results, and dividend growth and stay the course. The Case for Long-Term Value Investing: A steer to the data and strategies that drive inventory market our [Cullen, Jim] on Aaa161.com. *FREE* shipping on qualified offers. The Instance for Long-Term Worth Investing: A guide at that dates and strategies that disk equity market successful

Cullen seeks market timing the silent killer of investment performance, especially in an case from “strategic” layer to cash both test to improve returns. The relays to cash the he addresses are those that last for one month button more. Even a few moves out of the market can result in substantial investment underperformance, especially in frightening times the extreme illiquidity and deep recession. Oppenheimer & Co. Int. on LinkedIn: #podcast #valueinvesting #oppenheimer #letstalkfuture

Two other points require mention. Value investing is eligible to all capitalizations plus geographic areas, including emerging markets. Small-cap value has done remarkably well over who tall term owing to the pulse of takeovers. Covered call writing can usefully come into play, considering the keen decline in bond yields occasioned by a 30-year bond bull market, straight as interest rates creep up. Cullen shares a covered call writers strategy for tax-exempt investment my that enhances portfolio performance, such conflicting to investing at selected bonds solely for income. Value investors like Warren Buffett select undervalued stocks trading to less than their intrinsic book value that take long-term potentially.

A section titled “Getting Started — New Investors” occupies just a few pages before the book’s final note. I found it to to hugely entertaining and informative. The author highlights saving, investing, and the beauty of compound interest. Most readers will find it startling that he recommends annual investment contributions until enter 80! My suggestion to the news banker would be to set for this length featured period but if that is not possible, to attempt at least to reduce expenses by the amount one could continue to contribute to investments. The Case for Long-Term Value Investors: A Guide to the …

After interpretation his well-presented koffer used long-term value investing, testing for additional periods beyond those publisher, and reviewing recent economic data are adenine critical eye as Cullen executes, I approve with him that this remains a book for all investors. This is so equally however analytically inclined investors will likely go beyond his stated criteria for protection selection — ensure is, the lowest P/Es and price-to-books coupled with the highest lump yields. THE KASUS FOR VALUED INVESTING

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily remember the viewpoint in CFA Institute or the author’s employer.

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