Active Value Investing: Making Money in Range-Bound Markets

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John Wiley & Sons, Jun 15, 2012 - Business & Economics - 304 pages
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A strategy to profit when markets are range bound–which is half of the time

One of the most significant challenges facing today’s active investor is how to make money during the times when markets are going nowhere. Bookshelves are groaning under the weight of titles written on investment strategy in bull markets, but there is little guidance on how to invest in range bound markets. In this book, author and respected investment portfolio manager Vitaliy Katsenelson makes a convincing case for range-bound market conditions and offers readers a practical strategy for proactive investing that improves profits. This guide provides investors with the know-how to modify the traditional, fundamentally driven strategies that they have become so accustomed to using in bull markets, so that they can work in range bound markets. It offers new approaches to margin of safety and presents terrific insights into buy and sell disciplines, international investing, "Quality, Valuation, and Growth" framework, and much more.

Vitaliy Katsenelson, CFA (Denver, CO) has been involved with the investment industry since 1994. He is a portfolio manager with Investment Management Associates where he co-manages institutional and personal assets utilizing fundamental analysis. Katsenelson is a member of the CFA Institute, has served on the board of CFA Society of Colorado, and is also on the board of Retirement Investment Institute. Vitaliy is an adjunct faculty member at the University of Colorado at Denver - Graduate School of Business. He is also a regular contributor to the Financial Times, The Motley Fool, and Minyanville.com.

 

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Contents

CHAPTER 1
LETS IDENTIFY THE ANIMAL
SECULAR VERSUS CYCLICAL
DISTINCTION BETWEEN SECULAR BULL BEAR AND RANGEBOUND MARKETS
STOCKS CARRIED THE TORCH IN THE LONGRUN MARATHON
INTERNATIONAL STOCKS WERE BRIGHT LIGHTS TOO
WILL GOLD SHINE AGAIN?
GOLDS RECENTLY EMERGED COMPETITION
TWO OUT OF THREE IS BETTER BUT IS IT ENOUGH?
CONCLUSION
CHAPTER 9
THINK LONGTERM ACT SHORTTERM
TIME STOCKS NOT THE MARKET
CASH IS KING
CHAPTER 10
YOU DONT HAVE TO OWN IT

THE DECEPTION OF THE LONG RUN MARATHON
RANGEBOUND MARKETS ERODE BULL MARKET RETURNS
THE LONG RUN FOR US MAY BE SHORTER THAN WE THINK
CHAPTER 2
BEAR MARKET DOLDRUMS
WHAT DOES A SECULAR RANGEBOUND MARKET FEEL LIKE?
VOLATILITY OF BULL AND RANGEBOUND MARKETS
CHAPTER 3
EARNINGS GROWTH
PRICE TO EARNINGS
SOURCES OF DIVIDEND YIELD
WHY RANGEBOUND MARKETS FOLLOW BULL MARKETS
CHAPTER 4
ASSET ALLOCATION ROLE IS DIMINISHED IN RANGEBOUND MARKETS
CHAPTER 5
MANAGEMENT
PREDICTABLE EARNINGS
STRONG BALANCE SHEET
SIGNIFICANCE OF FREE CASH FLOWS
HIGH RETURN ON CAPITAL
CHAPTER 6
PAST HAS PASSED
DIVIDENDS
GROWTH MATTERSA LOT
CHAPTER 7
REVIEW OF RELATIVE VALUATION TOOLS
ABSOLUTE VALUATION TOOLSDISCOUNTED CASH FLOW ANALYSIS
RELATIVE VERSUS ABSOLUTE TOOLS
ABSOLUTE MODELS OVERVIEW
THE FALSE PRECISION OF MATH
ABSOLUTE PE MODEL
DISCOUNT RATE MODEL
MARGIN OF SAFETY MODEL
THE MARRIAGE OF ABSOLUTE PE AND MARGIN OF SAFETY
BRING OUT THE TOOLBOX
THE PE COMPRESSION AND HOW TO DEAL WITH IT
CHAPTER 8
QUANTIFY EVERYTHING AND BE A CONTRARIAN HEADLINE INVESTOR
TIME ARBITRAGE
FINDING NEW IDEAS
DO INDEPTH PRIMARY YOUR OWN RESEARCH AND DOCUMENT IT
CHAPTER 11
SAME DIFFERENCE
LOCATION OF CORPORATE HEADQUARTERS ABROAD MAY NOT CONSTITUTE A FOREIGN COMPANY
WHAT ABOUT THE UNITED STATES?
PICK YOUR COMFORT ZONE AND GO FROM THERE
DONT CONFUSE A FASTGROWING ECONOMY AND A GOOD INVESTMENT
CURRENCY RISK
CONCLUSION
CHAPTER 12
SELLING WHEN STOCK PRICE HAS GONE UP
SELLING WHEN FUNDAMENTALS HAVE DETERIORATED
CONCLUSION
CHAPTER 13
PROPERTIES OF RANDOMNESS
THE CROCODILE HUNTER RANDOMNESS AND INVESTING
UNDERSTAND THE LINKAGE BETWEEN AND INSIDE QVG DIMENSIONS
IDENTIFY IMPACT OF RANDOMNESS ON VALUE CREATORS
THE COST OF BEING WRONG
CONCLUSION
CHAPTER 14
DONT BET THE FARM
TOO MANY EGGS OR TOO MANY BASKETS
MENTAL ACCOUNTING AND DIVERSIFICATION
MENTAL ACCOUNTING AND RANDOMNESS IN A STOCK PORTFOLIO
RANDOMNESS COULD BE YOUR FRIEND
CHAPTER 15
BULL MARKETS
BEAR AND RANGEBOUND MARKETS
BONDS?
NO I AM NOT WRONG
AUTHORS NOTE
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About the author (2012)

VITALIY N. KATSENELSON, CFA, has been involved with the investment industry since 1994. He is a portfolio manager with Investment Management Associates, where he comanages institutional and personal assets utilizing fundamental analysis. He is also an adjunct faculty member at the University of Colorado at Denver, Graduate School of Business. Katsenelson is a regular contributor to the Financial Times, MarketWatch from Dow Jones, and Minyanville.com. He is a CFA charter holder, member of CFA Institute, has served on the boards of the CFA Society of Colorado, and is currently on the board of the Retirement Investment Institute. Katsenelson received both his bachelor of science and his master of science in finance from the University?of Colorado at Denver, where he graduated cum laude. To read articles Katsenelson has written over the years, please visit: ContrarianEdge.com or ActiveValueInvesting.com.

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