The Five Rules for Successful Stock Investing: Morningstar's Guid

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Authors

Foreword IX
Introduction: Picking Great Stocks Is Tough XV
It's the Business that Matters XVI
The Long-Term Approach XVII
Having the Courage of Your Convictions XVIII
Let's Get Started XVIII
Chapter 1 The Five Rules for Successful Stock Investing 1
Do Your Homework 2
Find Economic Moats 3
Have a Margin of Safety 3
Hold for the Long Haul 5
Know When to Sell 7
Investor's Checklist: The Five Rules for Successful Stock Investing 11
Chapter 2 Seven Mistakes to Avoid 13
Swinging for the Fences 14
Believing that It's Different This Time 14
Falling in Love with Products 15
Panicking When the Market Is Down 15
Trying to Time the Market 17
Ignoring Valuation 18
Relying on Earnings for the Whole Story 18
Investor's Checklist: Seven Mistakes to Avoid 19
Chapter 3 Economic Moats 21
Evaluating Profitability 22
Building an Economic Moat 24
How Long Will It Last? 33
Industry Analysis 36
Investor's Checklist: Economic Moats 37
Chapter 4 The Language of Investing 39
The Basics 39
Where the Money Goes 41
Practical Financials--The Statements in Use 42
Investor's Checklist: The Language of Investing 48
Chapter 5 Financial Statements Explained 49
The Balance Sheet 50
The Income Statement 59
The Statement of Cash Flows 66
Conclusion 76
Investor's Checklist: Financial Statements Explained 78
Chapter 6 Analyzing a Company--The Basics 79
Growth 80
Profitability 85
Financial Health 96
The Bear Case 99
Conclusion 100
Investor's Checklist: Analyzing a Company--The Basics 100
Chapter 7 Analyzing a Company--Management 103
Compensation 104
Character 108
Running the Business 110
Investor's Checklist: Analyzing a Company--Management 112
Chapter 8 Avoiding Financial Fakery 113
Six Red Flags 114
Seven Other Pitfalls to Watch Out For 117
Investor's Checklist: Avoiding Financial Fakery 123
Chapter 9 Valuation--The Basics 125
Paying Up Rarely Pays Off 126
Using Price Multiples Wisely 128
Say Yes to Yield 135
Investor's Checklist: Valuation--The Basics 137
Chapter 10 Valuation--Intrinsic Value 139
Cash Flow, Present Value, and Discount Rates 140
Calculating Present Value 143
Fun With Discount Rates 144
Calculating Perpetuity Values 147
Margin of Safety 152
Conclusion 153
Investor's Checklist: Valuation--Intrinsic Value 154
Chapter 11 Putting It All Together 155
Advanced Micro Devices 155
Biomet 164
Conclusion 175
Chapter 12 The 10-Minute Test 177
Does the Firm Pass a Minimum Quality Hurdle? 178
Has the Company Ever Made an Operating Profit? 178
Does the Company Generate Consistent Cash Flow from Operations? 178
Are Returns on Equity Consistently above 10 Percent, with Reasonable Leverage? 179
Is Earnings Growth Consistent or Erratic? 179
How Clean Is the Balance Sheet? 179
Does the Firm Generate Free Cash Flow? 180
How Much "Other" Is There? 180
Has the Number of Shares Outstanding Increased Markedly over the Past Several Years? 180
Beyond the 10 Minutes 181
Chapter 13 A Guided Tour of the Market 183
Where to Look 184
Conclusion 185
Chapter 14 Health Care 187
Economic Moats in Health Care 188
Pharmaceuticals 189
Generic Drug Companies 195
Biotechnology 197
Medical Device Companies 200
Health Insurance/Managed Care 202
Investor's Checklist: Health Care 204
Chapter 15 Consumer Services 207
Companies We See Every Day 208
Restaurants 209
Retail 211
Conclusion 217
Investor's Checklist: Consumer Services 218
Chapter 16 Business Services 219
Outsourcing Trend 220
Economic Moats in Business Services 220
Technology-Based Businesses 221
People-Based Businesses 224
Hard-Asset-Based Businesses 226
Investor's Checklist: Business Services 229
Chapter 17 Banks 231
It's All about Risk 233
Managing Credit Risk 233
Selling Liquidity 235
Managing Interest Rate Risk 236
Economic Moats in Banks 239
Hallmarks of Success for Banks 241
Investor's Checklist: Banks 245
Chapter 18 Asset Management and Insurance 247
Asset Management 247
Life Insurance 253
Property/Casualty Insurance 257
Investor's Checklist: Asset Management and Insurance 263
Chapter 19 Software 265
Segments of the Software Industry 266
Economic Moats in the Software Industry 268
Software Accounting 101 269
Red Flags 270
Hallmarks of Success for Software Companies 271
What's Not to Like about Software? 273
Conclusion 273
Investor's Checklist: Software 274
Chapter 20 Hardware 275
What Drives the Hardware Industry 276
Hardware Industry Dynamics 277
Economic Moats in Hardware 279
Hallmarks of Success for Hardware Companies 282
Investor's Checklist: Hardware 283
Chapter 21 Media 285
How Media Companies Make Money 286
Economic Moats in Media 288
Publishing Profits 289
Broadcasting and Cable 290
Investing in the Entertainment Industry 291
Hallmarks of Success in the Media Sector 292
Risks in the Media Sector 293
Investor's Checklist: Media 294
Chapter 22 Telecom 295
Telecom Economics 298
Economic Moats in Telecom 300
Hallmarks of Success in Telecom 302
Conclusion 303
Investor's Checklist: Telecom 303
Chapter 23 Consumer Goods 305
How Companies Make Money in Consumer Goods 306
Key Strategies for Growth 306
What's Not to Like in Consumer Products 309
Economic Moats in Consumer Goods 310
Hallmarks of Success in Consumer Goods 313
Conclusion 315
Investor's Checklist: Consumer Goods 315
Chapter 24 Industrial Materials 317
The Problem with Cyclicality 318
Economic Moats in Basic Materials 320
Economic Moats in Industrial Materials 321
Hallmarks of Success in Industrial Materials 324
Red Flags 326
Finding Opportunities in Industrial Materials 329
Investor's Checklist: Industrial Materials 329
Chapter 25 Energy 331
From the Ground 331
To the Pipelines 332
To the Refineries 333
To the Consumers 333
Providing the Services 333
The Impact of Commodity Prices 335
Economic Moats in Energy 337
Hallmarks of Success for Energy Companies 338
Risks in the Energy Sector 339
Conclusion 340
Investor's Checklist: Energy 340
Chapter 26 Utilities 341
Electricity Primer 341
Regulation, Regulation, Regulation 343
Financial Characteristics of Utilities 344
Hallmarks of Success for Utility Companies 345
Risks in the Utilities Sector 346
The Big Picture 347
Investor's Checklist: Utilities 347
Appendix 349
Recommended Readings 353
Morningstar Resources 355
Index 357

Title: The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market

Manufacturer:

Wiley

Item Number: 9780471686170

Publication Date: December 2004

Product Description: Full Name: The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market; Short Name:The Five Rules for Successful Stock Investing

Universal Product Code (UPC): 9780471686170

WonderClub Stock Keeping Unit (WSKU): 9780471686170

Rating: 5/5 based on 2 Reviews

Image Location: https://wonderclub.com/images/covers/61/70/9780471686170.jpg

Category: Media >> Books

Weight: 0.200 kg (0.44 lbs)

Width: 8.920 cm (3.51 inches)

Heigh : 6.940 cm (2.73 inches)

Depth: 1.020 cm (0.40 inches)

Date Added: August 25, 2020, Added By: Ross

Date Last Edited: August 25, 2020, Edited By: Ross

Price	Condition	Delivery	Seller	Action
$99.99	Digital	Arrives between May 4 - Jun 3 Login to your account for a direct download. Some files are emailed from Dropbox. Continent $0.00 - World $0.00	WonderClub (9296 total ratings)

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reviewed The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market on May 01, 2015

The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market

Amazing book for beginners!

This book was recommended to me by a colleague after I showed some interest in stock investing. Prior to reading this book, I knew practically nothing about businesses or the market at all. I had no clue what an index was, or what equity, assets or liabilities are. On my own time I would follow the stock price of some companies that were always under the highlight (apple, google, facebook, tesla) and imagine what would happen if I were to speculate and try to beat the market. Oh, how naive I was....

Pat Dorsey introduced me to a whole other world that I didn't even know existed. I learnt what the purpose of stocks and the market really is. Why people invest, and why they don't. I learnt that this isn't just a game where one gets lucky by stealing or outsmarting the other person by properly timing his buy/sell, but that stock investing is actually a science. Though there are assumptions and speculations one needs to consider, there are objectively bad right and wrong decisions that one could make. It is difficult to express how excited I was about applying the lessons I learnt from this book to the real world, but I need to remember that patience is virtue.

In this book, I learnt about the inner workings of a company and it's management. I learnt about how finances are tracked. Most importantly, I learnt how to identify and evaluate good businesses. Seeing how stocks are always in the news, and that we all work for companies which are valued at something, regardless of whether they are public or private, I have gained a lot of insight into the world around me. In addition to learn a useful skill of what I should do with money, I also learnt how the company I work at operates, and believe that the skills I gained may also be very beneficial in the future if I choose to pursue entrepreneurship.

I've always had a keen interest as to how companies function, but never knew how to act on this impulse. While reading this book, I started watching videos on youtube, reading various articles, and just browsing investopedia to educate myself furthermore. I realize that this is just the beginning, but it ignited a spark that has turned into a roaring flame.

Some parts of the book I very dense, and even though I took my time reading through it, I still couldn't retain everything I learnt. That being said, it was written in such a way that I could use it as a reference until I familiarize myself very well with all the concepts it discusses. And if not, then the foundation that it has set up is priceless.

Even though this book is a little outdated given how much our economy has changed over the past 12 years, I still think that it's a must for anyone who is interested in learning about stock investing but knows nothing about it.

The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market Book

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	Foreword	IX
	Introduction: Picking Great Stocks Is Tough	XV
	It's the Business that Matters	XVI
	The Long-Term Approach	XVII
	Having the Courage of Your Convictions	XVIII
	Let's Get Started	XVIII
Chapter 1	The Five Rules for Successful Stock Investing	1
	Do Your Homework	2
	Find Economic Moats	3
	Have a Margin of Safety	3
	Hold for the Long Haul	5
	Know When to Sell	7
	Investor's Checklist: The Five Rules for Successful Stock Investing	11
Chapter 2	Seven Mistakes to Avoid	13
	Swinging for the Fences	14
	Believing that It's Different This Time	14
	Falling in Love with Products	15
	Panicking When the Market Is Down	15
	Trying to Time the Market	17
	Ignoring Valuation	18
	Relying on Earnings for the Whole Story	18
	Investor's Checklist: Seven Mistakes to Avoid	19
Chapter 3	Economic Moats	21
	Evaluating Profitability	22
	Building an Economic Moat	24
	How Long Will It Last?	33
	Industry Analysis	36
	Investor's Checklist: Economic Moats	37
Chapter 4	The Language of Investing	39
	The Basics	39
	Where the Money Goes	41
	Practical Financials--The Statements in Use	42
	Investor's Checklist: The Language of Investing	48
Chapter 5	Financial Statements Explained	49
	The Balance Sheet	50
	The Income Statement	59
	The Statement of Cash Flows	66
	Conclusion	76
	Investor's Checklist: Financial Statements Explained	78
Chapter 6	Analyzing a Company--The Basics	79
	Growth	80
	Profitability	85
	Financial Health	96
	The Bear Case	99
	Conclusion	100
	Investor's Checklist: Analyzing a Company--The Basics	100
Chapter 7	Analyzing a Company--Management	103
	Compensation	104
	Character	108
	Running the Business	110
	Investor's Checklist: Analyzing a Company--Management	112
Chapter 8	Avoiding Financial Fakery	113
	Six Red Flags	114
	Seven Other Pitfalls to Watch Out For	117
	Investor's Checklist: Avoiding Financial Fakery	123
Chapter 9	Valuation--The Basics	125
	Paying Up Rarely Pays Off	126
	Using Price Multiples Wisely	128
	Say Yes to Yield	135
	Investor's Checklist: Valuation--The Basics	137
Chapter 10	Valuation--Intrinsic Value	139
	Cash Flow, Present Value, and Discount Rates	140
	Calculating Present Value	143
	Fun With Discount Rates	144
	Calculating Perpetuity Values	147
	Margin of Safety	152
	Conclusion	153
	Investor's Checklist: Valuation--Intrinsic Value	154
Chapter 11	Putting It All Together	155
	Advanced Micro Devices	155
	Biomet	164
	Conclusion	175
Chapter 12	The 10-Minute Test	177
	Does the Firm Pass a Minimum Quality Hurdle?	178
	Has the Company Ever Made an Operating Profit?	178
	Does the Company Generate Consistent Cash Flow from Operations?	178
	Are Returns on Equity Consistently above 10 Percent, with Reasonable Leverage?	179
	Is Earnings Growth Consistent or Erratic?	179
	How Clean Is the Balance Sheet?	179
	Does the Firm Generate Free Cash Flow?	180
	How Much "Other" Is There?	180
	Has the Number of Shares Outstanding Increased Markedly over the Past Several Years?	180
	Beyond the 10 Minutes	181
Chapter 13	A Guided Tour of the Market	183
	Where to Look	184
	Conclusion	185
Chapter 14	Health Care	187
	Economic Moats in Health Care	188
	Pharmaceuticals	189
	Generic Drug Companies	195
	Biotechnology	197
	Medical Device Companies	200
	Health Insurance/Managed Care	202
	Investor's Checklist: Health Care	204
Chapter 15	Consumer Services	207
	Companies We See Every Day	208
	Restaurants	209
	Retail	211
	Conclusion	217
	Investor's Checklist: Consumer Services	218
Chapter 16	Business Services	219
	Outsourcing Trend	220
	Economic Moats in Business Services	220
	Technology-Based Businesses	221
	People-Based Businesses	224
	Hard-Asset-Based Businesses	226
	Investor's Checklist: Business Services	229
Chapter 17	Banks	231
	It's All about Risk	233
	Managing Credit Risk	233
	Selling Liquidity	235
	Managing Interest Rate Risk	236
	Economic Moats in Banks	239
	Hallmarks of Success for Banks	241
	Investor's Checklist: Banks	245
Chapter 18	Asset Management and Insurance	247
	Asset Management	247
	Life Insurance	253
	Property/Casualty Insurance	257
	Investor's Checklist: Asset Management and Insurance	263
Chapter 19	Software	265
	Segments of the Software Industry	266
	Economic Moats in the Software Industry	268
	Software Accounting 101	269
	Red Flags	270
	Hallmarks of Success for Software Companies	271
	What's Not to Like about Software?	273
	Conclusion	273
	Investor's Checklist: Software	274
Chapter 20	Hardware	275
	What Drives the Hardware Industry	276
	Hardware Industry Dynamics	277
	Economic Moats in Hardware	279
	Hallmarks of Success for Hardware Companies	282
	Investor's Checklist: Hardware	283
Chapter 21	Media	285
	How Media Companies Make Money	286
	Economic Moats in Media	288
	Publishing Profits	289
	Broadcasting and Cable	290
	Investing in the Entertainment Industry	291
	Hallmarks of Success in the Media Sector	292
	Risks in the Media Sector	293
	Investor's Checklist: Media	294
Chapter 22	Telecom	295
	Telecom Economics	298
	Economic Moats in Telecom	300
	Hallmarks of Success in Telecom	302
	Conclusion	303
	Investor's Checklist: Telecom	303
Chapter 23	Consumer Goods	305
	How Companies Make Money in Consumer Goods	306
	Key Strategies for Growth	306
	What's Not to Like in Consumer Products	309
	Economic Moats in Consumer Goods	310
	Hallmarks of Success in Consumer Goods	313
	Conclusion	315
	Investor's Checklist: Consumer Goods	315
Chapter 24	Industrial Materials	317
	The Problem with Cyclicality	318
	Economic Moats in Basic Materials	320
	Economic Moats in Industrial Materials	321
	Hallmarks of Success in Industrial Materials	324
	Red Flags	326
	Finding Opportunities in Industrial Materials	329
	Investor's Checklist: Industrial Materials	329
Chapter 25	Energy	331
	From the Ground	331
	To the Pipelines	332
	To the Refineries	333
	To the Consumers	333
	Providing the Services	333
	The Impact of Commodity Prices	335
	Economic Moats in Energy	337
	Hallmarks of Success for Energy Companies	338
	Risks in the Energy Sector	339
	Conclusion	340
	Investor's Checklist: Energy	340
Chapter 26	Utilities	341
	Electricity Primer	341
	Regulation, Regulation, Regulation	343
	Financial Characteristics of Utilities	344
	Hallmarks of Success for Utility Companies	345
	Risks in the Utilities Sector	346
	The Big Picture	347
	Investor's Checklist: Utilities	347
	Appendix	349
	Recommended Readings	353
	Morningstar Resources	355
	Index	357