New Principles of Equity Investment

Les Coleman
University of Melbourne, Australia

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Product Details
05 Feb 2019
Emerald Publishing Limited
327 pages - 152 x 229mm
Observation of investment practices reveal they are more haphazard than investors and researchers would have us believe, and a new paradigm of equity investment is required. New Principles of Equity Investment completes a trilogy that applies the scientific method to equity investing, and proposes a paradigm of equity investment that is grounded in field evidence, explains behavioural puzzles, and is consistent with empirically validated theory. 

To make the task of equity investment manageable, this book strips it back to ranking candidate firms, and sets aside the complex yet separate job of allocating an investment portfolio between asset classes. In the paradigm proposed here, equity prices have four components related to intrinsic value, size and setting of the transaction, optionality, and extrinsic value, which is crowdsourced through feedback between investors’ decisions.  

By accepting the limited foresight of investors, and limiting their horizon to a reasonably foreseeable next year, this book provides a coherent, workable theory of equity prices that can be actioned by equity investors, and explains logical investor behaviours that have previously been thought of as biases.
Chapter 1. What this book is about 
Chapter 2. Four component model of equity pricing 
Chapter 3. How professionals invest 
Chapter 4. Risk in equity investment 
Chapter 5. Fundamental analysis of equities 
Chapter 6. Pricing equities within the four component model 
Chapter 7. Market level influences and transaction timing 
Chapter 8. Portfolio construction and performance evaluation 
Chapter 9. Summary and conclusions
Les Coleman is a finance academic at the University of Melbourne with 29 years of industry experience. He has previously worked in several senior investment roles which include being a trustee of three superannuation funds, and investment committee member. His main research interest is financial decision making by investment funds and firms, with a particular focus on risk and sustainability as decision stimuli.

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