Expectations Investing: Reading Stock Prices for Better Returns

Introduction:

Stock prices are the clearest and most reliable signal of the market’s expectations about a company’s future performance. The key to successful investing is to estimate the level of expected performance embedded in the current stock price and then to assess the likelihood of a revision in expectations. Investors who properly read market expectations and anticipate revisions increase their odds of achieving superior investment results. The expectations investing process allows you to identify the right expectations and effectively anticipate revisions in a company’s prospects.

The expectations investing process represents a fundamental shift from the way professional money managers and individual investors select stocks today. This book presents both the compelling benefits for expectations investing as well as the tools that investors need to implement it for all publicly traded stocks—old- and new-economy stocks, value and growth stocks, as well as start-up stocks.

This book brings the power of expectations investing to portfolio managers, security analysts, investment advisers, individual investors, and business students. We believe that expectations investing will generate substantial interest in the corporate and the investment communities. After all, both investors and managers accept stock price as the “scorecard” for corporate performance. Companies seeking to outperform the Standard & Poor’s 500 Index or an index of their peers can use expectations investing to establish the reasonableness of the goal.