How to Value Shares and Outperform the Market
A simple, new and effective approach to value investing
By Glenn Martin
How to Value Shares and Outperform the Market
A simple, new and effective approach to value investing
By Glenn Martin
Jacket text
The simplest way to make money in the stock market is to buy shares when they are cheap and make profits when their prices increase. This technique is known as value investing and is the creed of the world’s most successful investor, Warren Buffett. But how do you know when a share price is cheap?
This book explains in simple terms how you can develop your own UK share and FTSE100 valuation spreadsheets to calculate share and market valuations. Comparing the valuations to current market prices reveals when shares are underpriced and produces calibrated buy and sell signals. The FTSE100 system, for example, indicates the periods when you should be invested in the FTSE100 and the periods when you should not be. Since 1984 the in-periods have produced 94 times more capital growth than the out-periods.
The new valuation system is the heart of this complete practical guide for managing your own investments. It shows how you should be able to double the value of your long-term investments purely through avoiding high commercial fund management fees. Using the new valuation system should help you do a lot better than this and, for example, secure a pension up to eight times larger than that provided by commercial managers.
As well as providing comprehensive information about the practical and profitable ways in which you can use the new valuation system, this book is a complete toolkit for creating personal wealth through UK equity investment. It includes risk controls, tax breaks, free information sources and recommendations on the best service providers. In short this book is your first step along the road to financial security.
About the author
After graduating from Wadham College, Oxford, Glenn Martin started a career in the City. Over 34 years he worked for a number of financial institutions. For the latter part of this career he worked as Chief Information Officer for investment banks. In 2004 he won the Banking Technology Award for the Best IT Operational Achievement.
As a successful private investor, in 1994 Glenn developed a system for calculating the intrinsic value of the FTSE 100 and of individual UK shares. When the system proved reliable, he established ShareMaestro Limited in 2006 to package and promote the system. ShareMaestro (www.sharemaestro.co.uk) has received very positive reviews in the financial press. For example, in the business section of the Daily Telegraph, Tom Stevenson said: "ShareMaestro ticks all the right boxes in my holy grail quest."
After his family and investment, Glenn's main interests are tennis, travel and drumming.
Reviews
“This is an excellent – and very readable – guide to the principles and practice of valuing shares from an expert with a first-rate record of identifying stock-market opportunities. A must-read for both aspiring and established value investors.”
“A raft of useful advice…a useful aid to investors of all levels of expertise. Not many books aimed at the private investor actually explain how to create and apply valuation models in such a simple manner, so for that reason alone the book is well worth a read.”
Media coverage
From SpreadBet Magazine:
At times, investing can seem like trying to navigate blindfolded, especially to the novice trader. We might know where we start from and where we want to end up, but we aren?t sure how to get there or where we are at any given point in time. In ?How to Value Shares and Outperform the… Read more »
From Hub Pages:
About the Author This very easy to digest book was written by Glenn Martin for the purpose of helping private investors their investment decisions more viable. Glenn himself started his career in the City of London and for over 34 years worked at various financial institutions. He has worked in retail banking and most other… Read more »
From Choice Magazine:
How to value shares and outperform the market by Glenn Martin Buy low and sell high is the secret to successful stock market investing, but how to achieve this goal taxes the best brains in the City. Knowing when a share is cheap and, perhaps even more crucially, when the time is right to sell,… Read more »
From Share Soc:
Book Review How to value shares and outperform the market: A simple, new and effective approach to value investing by Glenn Martin Glenn Martin, who has a background in investing and IT, developed his Share-Maestro stock market valuation system in the mid 1990s, packaging and marketing it from 2007 after backtesting and looking at its… Read more »
From Media Review:
Why the FTSE100 is better than cash ? Shares Magazine 12th January 2012
From Stockopedia:
An excellent book landed on my desk before Christmas called How to Value Shares and Outperform the Market by former Cazenove banker Glenn Martin. Martin takes a swing at most investing ratios like the PE as they completely ignore the prevailing economic environment. Martin rationally sets about showing how investors can create a valuation spreadsheet… Read more »
From stockopedia.co.uk:
“An excellent book.” Forecasting the Footsie (or is buy and hold dead)? ? Stockopedia 4th January 2012
From investorschronicle.co.uk:
Super-size Your Pension ? Investors Chronicle 30th December 2011
From This is Money:
The aim of savers should be to maximise the real returns on their savings – returns stripped of inflation. If the nominal value of your savings has doubled and inflation has tripled, you are actually a lot worse off. Hence throughout this article I will be referring to real values and returns. All equity returns… Read more »
Contents
Acknowledgements
Risk and copyright warnings
Preface
Prologue: The Birth of My New Valuation System
PART I - CRITICAL INVESTMENT CHOICES
1. Asset Selection - Choosing Equities
The outperformance of other assets by equities
Index-linked investments
The reason for equity outperformance
2. Why You Should Manage Your Own Funds
Fund management options
The impact of fees on long-term fund values
The underperformance of commercial funds
Better returns from a smarter approach
PART II - INTRODUCTION TO VALUE INVESTING
3. What Is Value Investing?
The principles of value investing
Origins of value investing
Traditional value investing approaches and their weaknesses
Value investing and growth investing
4. Other Approaches to Investing
1. Technical analysis
2. Event-based investing
5. My New Approach to Value Investing
The sources of value
A five-year investment period
Dividends at the heart of the process
The detailed steps to determine current value
6. The Superior Returns You Can Expect from Using the System Effectively
The long-term returns achieved by the ShareMaestro funds
Building wealth through superior, long-term compound returns
What returns to expect from a share portfolio
PART III - THE NEW VALUATION SYSTEM
7. A Step-By-Step Guide to Valuing the Market
Input data
Results
The final valuation
Setting up a master valuation sheet
The nature of the input data
The reliability of the System's FTSE100 valuations
8. Using the System's Market Valuations as Buy and Sell Signals
Extreme signals
The optimum buy and sell signals for the FTSE100
Validation of the buy and sell signals
The importance of the FTSE100 dividend
9. A Step-By-Step Guide to Valuing Individual Shares
A more difficult task than valuing the market
Input data 104 Results
The final valuation
Setting up a master share valuation sheet
10. Testing Different Valuation Scenarios
Altering inputs in the FTSE100 valuation
Altering inputs in the valuation of individual shares
Identifying one-way bets
Value-buying rather than random-buying substantially increases your chances of success
PART IV - PUTTING THE SYSTEM INTO PRACTICE
11. Medium-Risk, High-Return Strategy
The principle of the strategy
FTSE100 ETF Strategy
Detailed track record of the strategy
Trading the FTSE250 to get even greater returns
12. Running Your Own Share Portfolio Successfully
1. Time your entry to the market
2. Draw up a shortlist of shares
3. Select shares for investment
4. Limit risk
5. Set up email alerts for the shares in your portfolio
6. Review progress and take appropriate action
Advantages of the share portfolio management strategy
13. Optimising Share Selection
1. Qualitative evaluation techniques
2. Quantitative evaluation techniques
14. Transforming Your Pension Prospects
Introduction
Why most young workers face pensions penury
How to escape pensions penury
Pension practicalities
15. Evaluating Fixed-Rate, Five-Year Cash Investments
Basic rate taxpayers
Higher rate taxpayers
16. Evaluating Structured Product Investments
Example of stress-testing a structured product
17. High-Risk, Stellar Return Strategy
Covered warrants
FTSE100 covered warrants strategy
Financial spread bet strategy
A possible modification to stop losses
PART V - INVESTMENT ESSENTIALS
18. Establishing Your Investment Objectives
Determining and monitoring your overall investment objectives
Your other investment objectives
Setting your investment targets
Freeing up money for investment
19. Taking Advantage of Tax Breaks
Self-Invested Personal Pensions (SIPPs)
Individual Savings Accounts (ISAs)
Additional Voluntary Contributions (AVCs)
Financial spread betting
Other allowances and planning devices
20. The Best Service Providers
1. Current account
2. Instant-access interest-bearing account
3. ISA provider
4. SIPP provider
5. Online broker
6. Covered warrants
7. Financial spread betting
8. ShareMaestro
9. ShareScope
21. Key Risk Controls
Manage your own funds
Do not be a passive investor
Use your parachute
Use stop-losses
Investing in individual shares
Make use of tax breaks
Monitor credit risk
Never put all your eggs in a high-risk basket
Monitor the FTSE100 dividend growth trend
Epilogue
Appendices
Appendix 1 - Free Web Information Sources
Appendix 2 - Glossary of Terms
Index
| Published: | 07/11/2011 |
|---|---|
| Edition: | 1st |
| Pages: | 286 |
| Formats: | paperback - ISBN 9780857190475 ebook - ISBN 9780857191779 |
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