1 of 14 people found the following review helpful
on June 22, 2009
Sum up the whole book it's saying you can't beat the market because it's efficient and don't even try it. Just buy index fund. It's call the EMT (Efficient Market Theory), the author said you can't find bargain.
According to Markiel, Benjamin Graham is wrong (he got rich twice by buying bargain), Warren Buffett doesn't exists, Walter Schloss can not make 20%+ for 40+ years and still going on....
Through out the history of finance you can find examples like say this:
Consider the case of Saucony shoes. In mid-2003, Saucony had
a market capitalization of $88 million, with net working capital of
$70 million and a beautiful headquarters building worth $10 million.
After netting out these assets, the entire company was selling for
$8 million (because one owns the assets when one buys the company).
At the time, Saucony was generating approximately $133 million in
annual sales, $7.3 million in earnings, and $13 million in free cash
' ow. And one could buy all this'in effect'for $8 million!
So, clearly, Saucony's assets were available at a bargain price. Con-
verse had recently been purchased by Nike (NKE) for one-and-a-half
times sales plus the assumption of debt. That formula would equate
to at least $200 million for Saucony, not including its $80 million in
tangible assets. During early 2004, Saucony rewarded shareholders
with a special cash dividend of $26 million ($4 per share). That was
nice enough, but the true catalyst came when Saucony was acquired
at a premium price by Stride Rite (SRR) in mid-2005.
- book exert from Art and Science of Value Investing - by Kinko's founder