Most investment books try to assess the attractiveness of a stock price by estimating the value of the company. Expectations Investing provides a powerful and insightful alternative to identifying gaps between price and value.
Michael J. Mauboussin and Alfred Rappaport suggest that an investor start with a known quantity, the stock price, and ask what it implies for future financial results. After showing how to read expectations, Mauboussin and Rappaport provide a guide to rigorous strategic and financial analysis to help investors assess the likelihood of revisions to these expectations. Their framework traces value creation from the triggers that shape a company s performance to the impact on the value drivers. This allows a practitioner of expectations investing to determine whether a stock is an attractive buy or sell candidate.
Investors who read this book will be able to evaluate stocks of companies in any sector or geography more effectively than those who use the standard approaches of most investors. Managers can use the book s principles to devise, adjust, and communicate their company s strategy in light of shareholder expectations.
This revised and updated edition reflects the many changes in accounting and the business landscape since the book was first published and provides a wealth of new examples and case studies.
About the Author
Michael J. Mauboussin is head of Consilient Research at Counterpoint Global, Morgan Stanley Investment Management. He is an adjunct professor of finance at Columbia Business School. His books include More Than You Know: Finding Financial Wisdom in Unconventional Places (Columbia, updated and expanded edition, 2007); Think Twice: Harnessing the Power of Counterintuition (2009); and The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing (2012).
Alfred Rappaport is the Leonard Spacek Professor Emeritus at Northwestern University s Kellogg School of Management. He is the author of Creating Shareholder Value (revised edition, 1997) and Saving Capitalism from Short-Termism: How to Build Long-Term Value and Take Back Our Financial Future (2011). Rappaport has been a guest columnist for the Wall Street Journal, the New York Times, the Financial Times, Fortune, and BusinessWeek.
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