Value investing has evolved over time. In Graham's day, a simple balance sheet analysis was enough to consistently outperform the market. Over the years, Mister Market It has been making it increasingly difficult for investors. Therefore, we have had to look for new methods to find hidden bargains in the stock market. One of the trends in recent years is the search for quality companies that have sustainable competitive advantages that allow them to maintain a higher than average profitability. Pat Dorsey's Little Book That Makes Wealth focuses on helping us identify these kinds of quality businesses that can be turned into exceptional investments when bought at a good price. In this article you have my analysis and evaluation of the book.
Fact Sheet of The Little Book That Generates Wealth
- Title: The Little Book That Generates Wealth
- Author: Pat Dorsey
- Translation: Pablo Martínez Bernal
- Publisher: Deusto
- Año: 2016
- Page: 234
Analysis and opinion of the book
As always, before starting with the analysis of the book, I like to give a brief introduction about the author. Pat Dorsey was Morningstar's chief analyst for years. He currently chairs and manages 4 types of competitive advantages:
- Intangible assets
- Replacement costs
- Network effect
- Cost advantages
The book explains what each of these competitive advantages consists of and how and where to look to find companies that have defensive moats.
Of course, identifying quality companies is not enough to find good investments. In order for a quality company to become a good investment, it also needs to be listed at an appropriate price. In my opinion, the business valuation part of the book is too simplistic, although it serves as a good introduction to this complex art.
The book is packed with current examples of listed companies, which makes it very practical and enjoyable. In it we can see Dorsey's opinion of dozens of companies such as Wal-Mart, Coca-Cola, Moody's, Autodesk, Harley-Davidson, McDonalds and a very long etc.
I also want to take this opportunity to congratulate Pablo Martínez Bernal on the translation of the book. I hope it is the first of many, if your schedule allows.
In short, The Little Book That Makes Wealth by Pat Dorsey has become an essential classic that cannot be missing from any investor's library. It is already part of my list of Recommended books to learn to invest in the stock market.
Evaluation of The Little Book that Generates Wealth
- Score: 9
- Level: Basic - Intermediate
- Recommended to: Investors who want to learn to recognize good companies
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