Value Trap: Theory of Universal Valuation

WOODSTOCK, Ill., March 24, 2021 /PRNewswire/ -- The second edition of the business book Value Trap: Theory of Universal Valuation has been awarded the bronze medal in the category of Personal Finance/Retirement Planning/Investing at the 2021 Axiom Business Book Awards, presented by Jenkins Group. Less than 20% of this year's entries won an award, and medals went to a mix of the established Big 5 publishers, prestigious university presses, and independent publishers. Previous Axiom Business Book Award medalists include Nobel laureate Robert Shiller, former U.S. Secretary of State Condoleezza Rice, and world-renowned historian and Pulitzer Prize winner Doris Kearns Goodwin. "It's an honor to be in the company of such esteemed publishers and exemplary authors," said Valuentum's President Brian Nelson, CFA. "Thank you to everyone at Jenkins Group for having such a fine awards program, and my deepest congratulations to all of this year's winners." Nelson's book Value Trap continues to advance finance and investing, encouraging forward-looking analysis in quantitative data applications while warning about price-agnostic trading and its impact on the health of the stock market and the savings of everyday investors. BookLife by Publishers Weekly noted of Value Trap that "readers steeped in the stock market will appreciate this persuasive economic treatise, which sounds the alarm on spurious quantitative analysis." BlueInk Review said the book "stands on its considerable merits as a well written and cogent articulation of a distinct perspective on equity analysis." Review: "Data 'makes us feel like we are in control, but the conclusions can be misleading if the data isn't used in the right way, ' Nelson warns in his persuasive debut, which attempts to shift the market's belief in quantitative models of stock analysis back toward a more traditional enterprise valuation approach. Nelson, the president of equity and dividend growth research at Valuentum Securities, demonstrates how quantitative evaluative techniques that base pricing and investment strategies on trends in large sets of past data can lead investors to mistake correlation for causation. This can lead to conclusions that, as he puts it, are 'no more predictive than believing the divorce rate in Maine will fall if we just slow our margarine consumption' simply because those two statistics have risen and fallen together. Nelson makes the case that 'spurious' or statistically insignificant correlations mined from ambiguous past data aren't just a danger for individual investors or investment managers, but in an era of unprecedented volatility, these strategies will continue to increase the market's erratic tendencies (especially in the uncertain age of Covid-19). Nelson proposes instead that greater returns-and greater market stability-would come from resuming strategies based on enterprise valuation, with an emphasis on forward-looking causal data and companies' available cash assets. This second edition is updated with a hefty prologue that invites readers to evaluate Nelson's track record. He surveys the relative stability of his Valuentum stocks-stocks that meet the criteria of his 15-point checklist-over the course of 2020, demonstrating them to have been at least "pandemic-resistant" when not "pandemic-proof." Readers eager for a simple investing system may find Nelson's thorough case-making frustrating, but this work was conceived as a cry for economic stability, not an entry-level guide, and more experienced investors will find it thought-provoking and worth their time. Takeaway: Readers steeped in the stock market will appreciate this persuasive economic treatise, which sounds the alarm on spurious quantitative analysis. Great for fans of Aswath Damodaran's 'The Little Book of Valuation: How to Value a Company, Pick a Stock and Profit'; Richard Barker's 'Determining Value: Valuation Models and Financial Statements.'" -- BookLife Review by Publis

Author: Brian M. Nelson
Publisher: Valuentum
Published: 07/20/2020
Pages: 428
Binding Type: Paperback
Weight: 1.38lbs
Size: 9.02h x 5.98w x 0.95d
ISBN: 9780998038483


Review Citation(s):
PW Booklife Reviews 12/21/2020

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