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I’m Working on a New Book

April 17, 2010 By 5 Comments

Finance BookI turn down several book contracts a year and have for probably the past 5 or 6 years.  Despite having one of the largest investing audiences online, other than my Penguin book contract in 2006, I avoid the commitments because I don’t like being tied to deadlines (even though I tend to work faster than most other people – it’s just something about having control over my own time).

However, I have been working on some ideas for a series of books that cover everything from finance (how to calculate intrinsic value for stocks, bonds, and real estate) to investment strategy (using advanced stock option techniques to improve your returns or reduce risk).  I’m not sure the exact form they will take, but the idea came to me as we stood in the kitchen about to leave the house to take Jocelyn to the airport during her last visit.  It just hit me, almost fully formed, out of nowhere.

So, last Sunday, I went to Panera and sat with a MacBook Pro and iPad, drank a cup of coffee, and started writing.  I’ve finished the draft of the first chapter and it is going to be better than anything I’ve ever done, written, or published – and that is saying a lot.  (I’m not going to tell you all the details but the idea is that I am creating a step-by-step guide to the the formulas necessary to calculate discounted cash flows and other important equations.  For example, someone could read it and use it to value a car wash, a lemonade stand, a Fortune 500 common stock, or a municipal bond.  I’m structuring it in such a way that anyone who can work a calculator will be able to do the formulas, even if they never learned how to calculate logarithms or other higher math functions.)

I have no idea when I’ll release it but I do know it will be finished.  It’s given me the same spark inside that the financial statement lessons did at About.com.  I know I can help people with this.  Plus, having my book listed in the iBook store on the iPad will be a nice bonus.

Related posts:

  1. Working on the New Finance Book Tonight
  2. Working on the Book and Investing
  3. Part I of the Next Book Is Almost Done …
  4. A Major Decision on My Next Book: Setup My Own Publishing Company or Sign Another Book Deal?
  5. The Joshua Kennon Contact Form Is Now Working

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  • Michael Clay

    First off, this is great news! Can’t wait to read the finished book…

    In response to your inquiry on the Beginner’s Investing Blog, it would be great if you included how you value stocks. Granted, we know the steps you take in analyzing a balance sheet and income statement, but how do you make the yes / no decision as an investor at the end of that ratio analysis? Personally, I feel like I can analyze a company’s balance sheet and income statement, run their ratios, check on a few of the competitors in their industry, and use some of the tools through a site like Google Finance, but at the end of the day I have a hard time telling if they are “undervalued” or “overvalued” at their current price and whether or not it would be a good idea to invest. Since I am a long term investor (under age 35), my usual answer is to buy especially at the current low historical rates for companies such as GE. However, once we get back to a “normal” market, what do you/we look for in a company that sets it apart from the rest? And are you/we really able to glean all this information from an annual report? I remember reading before that you would be pouring through a 10K and get so upset at what management was doing that you would “throw the report across the room in disgust.” A little insight into what made you throw that report across the room would be helpful so we can avoid investing in companies like that.

    Instead of the book, can I just be a fly on the wall for a few days at your office. I don’t ask for much…thanks!
    - Michael

  • klester

    Sounds like a great investment. Please make available on Kindle – I never buy hardcopies anymore.

  • kgopalrao

    How to calculate intrinsic value would be a great lesson for all of us. may I bounce my own idea off you, and u find it’s ok do include it in the book. may I request an e-mail to indicate whether u found it made sense. Here goes, briefly.
    The ultimate indicator of any co’s ability to create wealth is the ROCE (Right/wrong?). The average ROCE for a reasonable period of, say, 5 yrs, is an indicator for the future too. Take the existing fig of total capital (equity +reserves+debt), and compound it by the avge ROCE of 5 yrs, to assess tot. capital at the end of the next 5 yrs. Calculate Enterprise value (EV) based on current mkt price and no of shares. Compare with estimate of total cap 5 yrs hence. There should be a substantial difference between current EV and estimated tot.cap down the line, for purchase at today’s CMP.
    No end of fine-tuning possible, but basically ths is it for a quick appraisal of whether CMP is a good intrinsic price.
    Now, can u tell me how u feel about it. My e-mail .

  • Muhammadrahim900

    hi Joshua! just wanted to ask if the book you were writing(intrinsic value calculation and all) is complete now?? if not how much more time should we expect it to take?? asking cause im pretty anxious about the book being released….REALLY need that intrinsic value folrmua!!! :D

    • Joshua Kennon

      I haven’t worked on it for about half a year; last I checked 105 pages were done but I’ve been busy and just haven’t picked up the manuscript in quite some time. I’m hoping to work on it again soon.