– Expectations Investing: Reading Stock Prices for Better Returns by Michael J. Mauboussin and Alfred Rappaport is a revised and updated resource that offers an alternative approach to identifying discrepancies between price and value in investments.
– The book focuses on the changes in accounting and the business landscape since its original publication in 2001, including factors such as disruption, user/subscriber platforms, passive investing, intangible investments, and the redirection of capital.
– The authors propose that investors should start with a company’s stock price and analyze what it implies for future financial results. They provide a framework for strategic and financial analysis to assess the probability of revisions to these expectations.
– The book’s core chapters (5, 6, and 7) outline the steps of the expectations investing process, which involve estimating market expectations, identifying potential revisions, and making decisions to buy, sell, or hold stock.
– The authors also discuss the importance of considering real options in valuation, particularly for startups and technology companies.
– This revised and updated edition provides valuable insights for practitioners, including investors and company managers, to bridge the gap between price and value while adapting to changes in the investment landscape.
Note: The opinions expressed in this article are the author’s own and should not be considered as investment advice.
