The Theory of Investment Value

Warren Buffet mentioned this as one of the most important works in investment and finance. It is an amazing read though one needs to go very slow.It has lots of details on investment, dividends, interest rates and correlation of all the factors in order to arrive at an intrinsic valuation. The concepts of marginal opinion, dividend discount model valuations, economics of dividends & interests as well as the detailed idea of impact of taxation are amazing. Indeed as John Burr Williams defines this book himself as a work for scientist & economists rather than a maxim for speculators. This book has been a foundation of investment philosophies of Markowitz, Buffet and many others.

The thing I found very hard to understand though, were the initial chapters centered around "marginal opinion". I think the author builds on top of a an "assumed" foundation which is a demanding prerequisite indeed! Once the central idea of Net Present Value is well understood, then putting it to practice is far-far easier than to read through rest of the chapters. The case studies might be more useful though! But I haven't gotten to that stage yet. Since finance/investing is not my profession, I am inclined to review the book through the lens of practicality than through theoretical value - And that makes me critical of anything that is non-procedural information.

Classic for any person who want to get in deep with serious long term investment. Remember this was originally a doctoral dissertation and the language is influenced by that, as well as the time it was written. Don't expect any smart investment guru jargon. It is a tough read but well worth if you take the time.

the plain words that jack boggle advocates: index invest at the lowest cost possible; it is a summary of the calculation of the differential equation of decay. easy math, but calculus is needed to understand it.well, if you can find the costs of index investing using diferential equations; then this book will give you a similar challenge.probably these quants have and edge over the average investor because they understand the abstract math.don't get discouraged though, the modern world is sophisticated and you need to get sophisticated too.

A staple in investment value. A must-read and the transaction was as expected. Thank you

The Theory of Investment Value is clearly an important work, as reflected in Benjamin Graham's citations to it and the prevalence of the dividend discount model in valuing stocks. The theories expounded in this book are of particular import to those to seek to by stock at a value less than the intrinsic value of a company as they determine it to be.The book itself initially appears intimidating, as there are a lot of mathematical equations, but in reality, the math is nothing more than simple algebra, mostly different models related to computing dividend values going forward.I found the book to be an interesting read, but it is highly theoretical in nature. The central theme of the book is that stocks are worth the present value of their dividends, paid in perpetuity. It does not discuss earnings manipulation, effect of dilution, securities with superior or inferior claim to payment, etc. Moreover, as Graham points out in Security Analysis, companies that have a high return on invested capital would be well advised to reinvest their profits, while less successful companies would be better off paying higher dividends (relative to book value). This would, of course, tend to make the practical application Williams' theory somewhat complicated, insofar as it makes computing future dividends more difficult.Readers looking for a more practical guide to valuing stocks might be better served reading Securities Analysis by Benjamin Graham, or any number of more "practical" books related to stock market analysis, particularly as those analyzing financial statements to determine the intrinsic value of a company. Some readers might also find "The Aggressive Conservative Investor" by Marty Whitman and Martin Shubik to be a good read for a competing view, since the authors of that book take the position that, with respect to non-controlling shareholders, a company's stock is worth the net after-tax cash that they expect to realize in the future, whether from dividends, liquidating events, etc. However, if a reader is truly interested in obtaining an understand of how dividends affect stock prices, the book is a worthy read.

If you are a value investor this will be a good book for you. It is advanced so make sure you have read other books on the subject and have a moderate understanding of the theories of value investing.

It's a very clear guide for establishing the value of a company. It requires certain mathematical knowledge. It must be studied as a text book