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Professors Paul Johnson and Michael Mauboussin have deconstructed securities analysis into the follow four subgroups. They believe that the entirety of securities analysis falls under these four subject areas. They refer to this as Value Based Research. All published reports are by Michael Mauboussin, except where noted. Capital Market Theory - sets the environment in which securities analysis is preformed. Without a well constructed view of modern capital markets, securities analysis may be a futile activity. Business Economics and Competitive Advantage - examines the economics of the company's business and its competitive advantage. The primary focus is to determine a company's ability to generate excess returns on capital and links the business strategy with fundamental finance and capital markets. Valuation - is the fundamental link between a company's expected financial performance and its overall value and valuation . Decision Making for Investors - investigates man's ability to perform "rationally" when conducting economic reasoning and analysis, and tries to determine the natural inhibitors that prevent us from performing optimally under these conditions. This page was last updated on 02/25/06. |