This book can make a reader into a value investor in value stocks or in value mutual funds. Browne lays out the argument that value investing is profitable. He also explains the general process for finding stocks that are good values. He does an excellent job of making arguments by analogy, such as suggesting that buying stocks cheap is just as desirable as buying groceries cheap. He uses this analogy to point out that many people buy stocks in ways dramatically different than buying groceries cheaply.
By the time Browne is done, it is hard not to think that the process of finding good stocks is sufficiently time consuming that it is best to delegate the work to a fund manager, which he suggests as an alternative to doing it oneself. Still, if you are thinking about investing in a mutual fund with a value style, this book can help you understand what the portfolio manager is doing.
Browne tries to deal with the general argument that cheap stocks are as likely as $20 bills on the sidewalk by suggesting that most investors make a systematic mistake. A value investor can profit at the expense of people making mistakes. Most investors don't want to be left behind when stocks are increasing and become excessively concerned when prices are falling. As a result, most investors are not value investors and there is money to be made from these investors.
This book assumes a basic knowledge of accounting – income statements and balance sheets – and not much else. Implementing the recommendations in the book would require the equivalent of at least a year of accounting classes.
The prose is clear and reasonably concise. The book is short, as the title implies. There is some repetition of arguments, though, which makes the book seem longer than necessary at points.
There is an 11 page addendum that discusses the related academic literature which supports the arguments made in the text.
This is a very nice little book.
