Five Key Lessons from Top Money Managers

By Scott Kays

An in-depth look at strategies and techniques of five of the country's best money managers In Five Key Lessons from Top Money Managers, Scott Kays taps into the investment knowledge of five of the nation's foremost money managers-Bill Nygren, Andy Stephens, Christopher Davis, Bill Fries, and John Calamos. Through extensive interviews with these investment experts, Kays found five principles that are common to all of them. This book discusses each of these five principles in detail-and gives readers specific tools to implement what they've learned by developing a step-by-step process that incorporates all five principles. Kays even teaches readers how to screen for companies that meet the criteria for quality businesses and then analyze three of the qualifying firms to determine if they sell above or below their fair market value.

• Format: Hardcover
• Language: English
• ISBN: 0471711837
• ISBN13: 9780471711834
• Release Date: June 2005
• Publisher: Wiley
• Length: 288 Pages
• Weight: 0.15 lbs.
• Dimensions: 1.0" x 6.5" x 9.3"

Customer Reviews

Trying to Learn from the Successful

I am a devout Index Fund fan, but I always try and keep an open mind and examine active management approaches as well. The author's approach for this book was to interview 5 managers who have beaten the S & P 500. He then identified common approaches from these 5 managers, which can be boiled down into a recommended process for individual investors. This style reminds me of a series of 4 books written by John Train across the 70's, 80's, and early 90's (The Money Masters, the New Money Masters, Dance of the Money Bees, and the Craft of Investing). John Train did this same kind of analysis of master investors to try to learn their secrets of success. The author boiled the methodologies of his 5 current day master investors into the following 5 steps: 1. Invest instead of speculate 2. Develop a very defined investment philosophy 3. Follow a detailed, repeatable process every time you analyze a security 4. Limit your investment selections to quality companies 5. Buy stock only when it is selling at or below fair market value The author then goes on to give a couple of specific examples of how to apply this 5 step methodology. The one issue I have with this approach is step #5 above. It sounds relatively easy to examine a company's historical financial performance, estimate how it will do the next 10 years, and then discount future earnings back to its intrinsic value......or stock price today. If the current market price is 60% or less than the company's intrinsic value, it is undervalued and you should buy it. Basically Benjamin Graham's method of buying companies for less than half of what they are worth, then selling when they reach full value. I did this approach on a few companies several years ago. What I found out discouraged me from using the calculated intrinsic value approach. I found that the slightest change in inputs (estimates of how the company will perform in the future)......had a dramatic impact on the intrinsic value stock price. I decided that intrinsic value calculations are more art than science at that point.......which probably explains why very few people (except Warren Buffett or Charlie Munger) can accurately identify the intrinsic value of a company. I don't think I have the time or talent to accurately identify intrinsic values......and therefore am happy to achieve market returns using Index Funds. If you think you do have this talent, and you think you can beat the market indexes every year, more power to you. The value approach of finding companies that you can buy for 50 or 60 cents on the dollar is probably less risky than other stock market investing methodologies. If you are interested in this approach, I would highly recommend you read John Train's Money Masters book........and the updated New Money Masters book. Also go to the library and retrieve the August 1, 1977 Forbes story titled Ben Graham's Last Will and Testament. It goes into mathematical detail how to screen companies for potential ad

Practical and easy-to-read.

Most investment books explain theory without giving you a way to apply it. After reading this book, I not only understand the buy/sell philosophies of the managers interviewed, but I also know where I fit on the spectrum of investing (I think Christopher Davis is my closest match) and how to apply my knowledge. The system of filters set up in the second half of the book offers a way to combine theoretical knowledge and individual investment needs with a solid system of finding stocks. If you've read other investment books and don't have a system for applying what you've learned, this book is for you! This book is something else you don't always find in the business sector: an enjoyable read that both entertains and informs. For the experienced investor, it offers a chance to pick the brains of the most successful managers in the country. All the managers explain their strategies for purchasing and selling stocks, as well as how they treat timing and value. Just a note: another reviewer mentioned one of the keys, "invest only when the stock price is below fair value," as being obvious. It is. But what is not so obvious--and something all the managers seemed to take very seriously--is how to determine the "fair" price of the stock based on more than simple P/E ratios. The book gives an actual formula for valuing stocks--it doesn't just stop with the concept. Very helpful!

Great Book for the Novice as Well As the Experienced Investor

Don't we all want to know what makes someone a success in their profession? Kays has brought together 5 of the country's top money managers and has unlocked the tried and true strategies that have made them a consistent success in the mutual fund industry. This book will help the novice investor create a solid investment philosophy built upon unchanging fundamentals. As well, the experienced investor will be reminded that having a consistent investment philosophy is the key to long term success. A look into each of the 5 money manager's backgrounds made for an unique and interesting read. All can benefit from this book.

I personally have benefited from the advice in this book!

I really loved the interesting stories about the five money manages that Kays' interviewed. Not only do you find out the common traits of all these successful fund managers, more important, Scott writes about how to actually find a stock using his valuation model, giving the reader the secrets to successful stock picking. "Finding the Blue Light Specials" was my favorite chapter and already I've found stocks that are undervalued, making the information in this chapter alone worth the price of the book many times over.

Great Book!

Scott Kays is an excellent author and has written a book that is easy for anyone to read and understand. I thoroughly enjoyed the book and feel like I learned so much and gained great insight on what Mr. Kays had to say. I highly recommend it!