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The Little Book of Investing Like the Pros: Five Steps for Picking Stocks




The Little Book of Investing Like the Pros: Five Steps for Picking Stocks

Joshua Rosenbaum

ISBN: 978-1-118-28140-6 October 2019 320 Pages



As you have probably noticed, there are quite a few investing books out there. Many of them were written by some of the world’s greatest investors. So, why should you read our book?

Stock investing is more prevalent than ever, whether directly or indirectly through brokerage accounts, exchange-traded funds (ETFs), mutual funds, or retirement plans. Despite this, the vast majority of individual investors have no train­ing on how to pick stocks. And, until now, there hasn’t been a truly accessible, easy-to-understand resource available to help them. The Little Book of Investing Like the Pros was written to fill this void.

We believe the simplicity and accessibility of our stock picking framework is truly unique. Using real-world examples and actual Wall Street models used by the pros, we teach you how to pick stocks in a highly accessible, step-by-step manner. Our goal is straightforward—to impart the skills necessary for finding high-quality stocks while protecting your portfolio with risk management best practices. Our practical approach is designed to help demystify the investing process, which can be intimidating. This training will help set you apart from others who are largely flying blind.

Pilots require extensive training before receiving a license. Doctors must graduate medical school, followed by a multi-year residency. Even those providing professional investment advice require certification. But, anyone can buy a stock without any training whatsoever. While buying stocks on a hunch and a prayer may not endanger your life, it can certainly put your finances at risk.

About the Authors ix

Foreword by Howard Marks xiv

Acknowledgments xvii

Disclaimer xxi

Introduction 1

Chapter One 17

Step I: Idea Generation 17

Screens 20

Bottom-Up Approach 22

Top-Down Approach 58

Chapter Two 69

Step II: Identifying the Best Ideas 69

Idea Review Framework 71

Investment Thesis 75

Business Overview 80

Management 89

Risks & Considerations 94

Financials & Valuation 97

Chapter Three 117

Step III: Business & Financial Due Diligence 117

Business Due Diligence 119

Financial Due Diligence 144

Chapter Four 167

Step IV: Valuation & Catalysts 167

Valuation 169

Market and Intrinsic Valuation 170

Buyout Valuation 190

Catalysts 202

Setting the Price Target 223

Chapter Five 229

Step V: Investment Decision & Portfolio Management 229

Making the Investment Decision 232

Monitor the Investment 239

Portfolio Construction 246

Portfolio & Risk Management 259