Wisdom on Value Investing | Book Review

The following review was written by ChristianPF reader Christine Veloria.

I read Wisdom on Value Investing: How to Profit on Fallen Angels by Gabriel Wisdom. The whole premise of the book is about how people need to move away from the herd mentality when it comes to investing. People see everyone buying certain stocks so they buy the same stocks, people see everyone selling their stocks so then they sell. Mr. Wisdom wants his readers to learn how to tell which stocks are good investments when to buy them and when to sell them, not to just follow what everyone else is doing. Fallen Angels are stocks or bonds that have lost most of their value but should regain that value in the future. How do you figure out which stocks or bonds are Fallen Angels? Mr. Wisdom gives you some methods in which enable you to recognize which are Fallen Angels or just junk. He also gives some reason for the creation of Fallen Angels.

Mr. Wisdom suggests using a free online stock screening program, one like Yahoo! Finance to sort through the many stocks available. Yahoo just happens to be the one I use to keep track of the two stocks I currently own. I actually thought of the Fallen Angel premise before I got a chance to read the book but since I am new to the stock market I really didn’t know what to look for. I had the right idea but not the knowledge to make an informed decision. The stock I bought was down low because of the economy I thought, I have been looking at Yahoo! Finance but I had no idea about the wealth of information that is available on there, until I read about it in Mr. Wisdom’s book. The stock I bought ended up being brought down by debt and that is one of the things Mr. Wisdom wants you to look at when you are buying stocks. He says that a company’s debt to equity ratio should be 40% or less. Mr. Wisdom has a few lists on what makes a good Fallen Angel. Once you do buy a Fallen Angel he has a method that will show you how much the stock could go up, then when the stock is near its top value it would be time to use your exit strategy. Mr. Wisdom goes over all of this in the book.

Did I like Wisdom on Value Investing? Yes and No. I liked the idea and the information the book contained. The hard part for me is figuring out what all the information meant and how to translate that into screener on Yahoo! Finance. I am still learning what all the terms mean like EBITDA margin, return on equity, PEG ratio and Price to sale ratio. I think once I learn more I might have a better understanding of his methods for finding great stocks at a lowered price. I found myself wishing he would have showed an example of a screener and went into more detail about what each term meant and where it belonged but that would be a book for a complete novice which I am. Because of that I found the book a little frustrating but this book did give me some methods and now it is up to me to sit down and take some more time to figure it all out.

Would I recommend the book to others? Yes, if you are familiar with the stock market and its terms you might pick up on the methods in this book quite easily and prove useful and profitable for you.