[서평] How to assign a buying price independently and accurately

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Vijay L Bhambwani
Monday, November 9, 2009 2:37 IST


Few books appear on the shelves that leave readers with a feeling of being richer in ideas and thought processes and also give them a deep sense of satisfaction for having upgraded their skills. Ken Fisher's Super Stocks is one such masterpiece.

Though Tata McGraw Hill has taken some time to bring out the low-priced Indian edition for domestic readers, the value of ideas presented in the book is both timeless and priceless.

Ken Fisher teaches you how to assign a buy price on a stock, independently, intelligently and accurately. He discloses his parameters and methodology in deploying various techniques put forth in the book and enables a lay investor to beat the so-called pros in the game. Split into four parts and 15 chapters, the book is sound in ideas and the presentation is lucid, simple and jargon free. After all, nothing less than perfection could be expected from a seasoned Forbes columnist of Fisher's calibre.

• His technique of stock valuation using market capitalisation to sales ratios revolutionised equity analysis in the '80s. The concept still remains valid as it was back then. 
• Fisher has presented some basic but extremely powerful formulae to value stocks based on a company's market share in absolute and relative terms and enabled investors to estimate future EPS figures based on this hypothesis. 
• His concept of focusing on RAGS (research, admin, selling and general expenses) as a component of total sales and deriving an opinion on the management quality is priceless insight indeed. Borrowing on the philosophy of Philip Fisher's "scuttlebutt" theory, this aspect is scarcely touched upon by other authors or with such simple but powerful impressions. 
• I found Fisher's pre-buy evaluation sheet formula quite useful as it helped me project future earnings, P/E multiple and estimated selling price of a share a few years down the line. Fisher has explained why very high P/E stocks can be cheap and should be still bought despite Wall Street's aversion and when these should be sold. 
• Fisher has employed the "Glitch" system very profitably for buying stocks of companies that are undergoing temporary but solvable problems, when everyone else is selling these shares. For equity research analysts, the list of FAQs to refer to during management meets and analyst presentations is superb and fully loaded.

In all, the book is a must read for all players in the markets. The low price of the Indian edition is a bonus by itself.