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F Wall Street (Book Review)

September 28th, 2015

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This blog post was originally published on the MoneyGeek.ca blog by Jin Choi. The website no longer exists, but Jin has graciously allowed us to re-publish his research for the benefit of future investors forever.

F Wall Street: Joe Ponzios No-Nonsense Approach to Value Investing for the Rest of Us is a book written by Joe Ponzio, which outlines an alternative way of thinking about investing: seeing a stock as an ownership to a business, not the obscure number markets regularly push higher or lower through forces unknown to the majority of its participants.

Despite the unfortunate association that comes with his name, Joe Ponzio is, unequivocally, the leading authority to apprise us of Wall Streets poor intentions, and even poorer actions. Whether its rebuffing exorbitant management fees, dubious investment schemes, or downright business fraud, this once-upon-a-time financial servant to Wall Street rips the curtain from an industry, wrought with speculative appetites, to expose the bare truth of how billions of investor dollars are spentand wasted. Now the founder of his own portfolio management firm, Ponzio urges readers to return to the fundamentals of investing, and ultimately, think like business owners.

Divided into four parts, F Wall Street tackles the broad subject of value investing in an organized fashion: first, by introducing the framework for thinking about stocksnamely, as living, breathing businesses; then, by discussing the traditional themes of value investing, such as margin of safety; and, finally, by exploring the inseparable connection between an individuals psychology and their long-term investment success.

Readers who will reap the most rewards from reading this book include those who are DIY investors. Indeed, theres an inspirational component to Ponzios book: why let an external manager, broker, or fund decide your financial future when you have the tools and knowledgenot to mention, beneficial interestto do it yourself? Yet, that is hardly the reason why I found F Wall Street to be so compelling.

Despite its over-the-top provocative title, this book really does stand above its peers. Never had I read a book that is as true to the spirit of value investing as F Wall Street.

Ponzio understands businesses (after all, he is a business owner himself, unlike many Wall Street professionals). He can differentiate between accounting earnings and real cash flow. He is able to look past the speculative mindset of most investors to discover true areas of profit. And whats more, he generously shares this overlooked wisdom with others in a book thats as accessible as it is authentic. Authentic to the individual investor who has his or her own agenda to pursue, not what the pundits of Wall Street tell them.

Part and parcel of the books gravitating appeal are its simple explanations and real-world examples. Contrary to most investing books, F Wall Street doesnt pore over Wal Marts P/E ratios or Johnson & Johnsons ROE. Instead, it takes a real hard look at what matters: the cash that is necessary to support these companies respective growths. By zeroing in on this lifeblood of every business, Ponzio highlights what most investors seem to miss, i.e. while a quantitative element is required to reach a valuation for a stock, nothing ranks as high for an investoror business investor, as Ponzio calls themas a thorough understanding of its business.

Those familiar with Buffetts brand of value investing will see clear parallels between Ponzios teaching style and that of the Great Sage of Omaha. Yet, even Buffet himself falls short in his spoken and written practicum. We never hear from him how to save for retirement, how to look at and value bonds, how frequently we should follow our investments, and the like. But with Ponzio, a former financial advisor, we can.

Ponzio does what so many authors are incapable of doing: he demystifies the world of investing to make it a personalized routine for individuals, like brushing ones teeth or cleaning ones room. To add to his books easy-to-grasp framework, Ponzio includes an instructive FAQ section, as well as a supplementary website that more rigorously expounds upon the simple instructions laced throughout its chapters.

In summation, many of Ponzios ideas seem contrarian and counterintuitive (e.g. using the same discount rate to value all companies, regardless of their level of risk), but his logic is so sound and convincing, that its very hard to ignore. Once reading this book, readers will feel compelled to rethink their long-term strategies for reaching their investment goals, be it trumping the market or simply saving enough for a blissful retirement.

And while it truly seems impossible to go through an entire reading without finding a single, glaring flaw, Im obliged to give F Wall Street its due credit, recognizing the amount of inspiration and insight it delivers, along with its bold attack of institutional greed and folly, which can be responded to in no better way, perhaps, than with Ponzios own personal sentiment.

F Wall Street.

Final Rating: 5 Stars

Disclosure:Neither the author nor MoneyGeek receives any compensation for promoting this book

Najim Mostamand is an investment freelance writer, helping individuals and institutions craft creative content for their investment platforms. Before starting his own writing business, Najim graduated from the University of California, Irvine, studied Creative Writing at Oxford University and served as a Financial Advisor at Morgan Stanley, while also completing levels I and II of the CFA Program. Now, he is engaging audiences with a new style of writing, one he calls a fusion of Wall Streets no-nonsense, analytical rhetoric and Main Streets creatively-personal self-expression.

This blog post was originally published on the MoneyGeek.ca blog by Jin Choi. The website no longer exists, but Jin has graciously allowed us to re-publish his research for the benefit of future investors forever.