WILEY The 52-Week Low Formula: A Contrarian Strategy that Lowers Risk, Beats the Market, and Overcomes Human Emotion

Amplifies "The Intelligent Investor", my old favorite.More current. My apologies to Jason Zweig.Now I have 2 favorite books!

Excellent book for the medium to long DIY investor. Taking the big picture you can learn to ride the rising wave with the technics and tips given in the book. It is not theory,this works if you put in the time to learn it. This is investing,not speculating.

I enjoyed reading this book. Gray has outlined simple contrarian value investing methodology in this book. This book can justly be called a investing manual because he has given step by step instructions that one can follow to select contrarian value stocks. Gray also presents research carried by Mornigstar on the efficacy of this method. The results look encouraging but the time frame for research is too small in my opinion. Although there are 5 different things to worry I suspect major reason for high returns is cheap valuation. He looks for very high FCF yield (2-3 multiple of risk free rate) and also look for high EBIT/EV yield while selecting his stocks. He also looks for MOAT rating for business given by Mornigstar. He wants business with wide MOAT. That may help explain the closure of the price- value gap in just 6 months! He keeps his stocks for only 6 months or 12 months (in taxable account) and then sells all and starts afresh. In this short term high ROIC or low ROIC, which he looks for, should not make much difference in my opinion. He is basically arbitraging Price- Value mismatch for wide MOAT companies and hoping for the gap to close in 6 months. This gap is highest when the business and results are negatively impacted due to some reason. That means you are buying when no one is hopeful on business prospects in the short and mid term. That is why price is tanked and is close to its 52 week low. Not an easy thing to do for an average investor and that is why this contrarian strategy should continue to work in the market. Not many can practice it for psychological reasons.

This is an important book. It provides the filters through which Mr. Wiley puts the stocks he and his clients should invest in. It took me a while to decide on writing this review. Two things happened recently that provided the push to do it. I was talking with a dairy farmer about milk quota and expanding his herd and he provided some details that after some thought made me realize he was doing an analysis of his operation to see how well it was doing. He was applying the necessary filters to his own operation to see if increasing the herd was a viable alternative. In my own life I had been collecting data on stock alerts and hadn't known what to do with all the data I had. I had started without knowing the end game and then when "52 week low formula" came into my life I realized that doing an analysis of those alerts may put me on to improving my stock selection.I had unwittingly used a series of filters to decide on buying this book. I had read the reviews, some not too complimentary. I had applied price as a filter. I had read the "See Inside" section to get a flavour of the book and whether it fit with my direction in understanding stocks. There also happened to be a question that came up and I e mailed the author and he replied with an answer. In other words the book prompted a thought process that I can apply to my own life and to my own finances.Another huge plus to this book is the use of many references to other books and works that relate to his filter selection. For instance, the introduction of the word "moat" as it pertains to stocks was something I hadn't read before and have seen many times since. It is an important filter suggesting a strong stock. The author goes on to explain for his Return on invested capital (ROIC) filter that it is a difficult number to obtain. On page 97 he states that it is a subjective number. It is about thinking through the issue of what should be a part of that number. It apparently works for him and his company!I really enjoy reading about stocks. I like them for their ability to make me think about how I can improve my own work with stock selection. This book will obviously show you the filters Mr. Wiley uses and then it is up to you to decide how they apply to you and how you can go about getting the information to make it work for you. It will cause you to think and seek out more opportunities to learn this great subject, stocks. I recommend this book.

The author has created a well thought out and logical value investment strategy. He did a great job supporting the strategy with lots of verifiable information and resources. I think most experienced investors could successfully employ his methods with acceptable results if they were to strictly follow his filters, as long as the author will disclose all of them in the future. I only have two criticisms. First, he spends too much time talking about his personal journey. This is understandable though. He is in sales and I'm sure the book is part marketing for his services. But this criticism doesn't diminish the quality of the investment strategy or his description of the strategy, which is excellent and easy to follow. But I think the people reading this book will probably be more advanced investors and will want to spend more time on the strategy versus the author's personal journey. My second criticism is on his description of "Filter 1: Competitive Advantage". I couldn't find in the text which ratios the author uses to filter for competitive advantage, which means the reader will not be able to recreate the strategy for themselves. I'm guessing high net profit margins and high consistent returns on equity may be the filters for competitive advantage, but unfortunately he doesn't disclose these stats. Maybe when his website is up and running the full set of filter stats will be disclosed. All in all it was a good read.