Best investment books for the holiday season

3 reads value investors can get lost in post-eggnog

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Christmas is fast approaching and some us aren’t looking forward to all of the shopping, cooking, and cleaning the holiday requires. That’s why, after consuming the last of the figgy pudding, you might want to settle down by the fire to read a nice book.

But instead of rereading the scandalous libel inflicted on poor Ebenezer Scrooge by Charles Dickens, you might opt for some lighter fare in the form of a good book on investing. Here are three recent offerings you should try.

Deep Value: Why Activist Investors and Other Contrarians Battle for Control of Losing Corporations
by Tobias E. Carlisle

Deep Value is perhaps the best book on value investing that has been written in recent years. It is filled with stories of about famous, and not so famous, value investors. Mr. Carlisle also makes a strong case for using what he calls the acquirer’s multiple to picks stocks and provides the numbers to back it up. It’s a strong buy for value investors.

Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism
by Jeff Gramm

Mr. Gramm provides the best history of shareholder activism that I’ve had the pleasure of reading. He starts with Benjamin Graham’s gentle nudging of companies in the early part of the twentieth century and moves to more recent times when activists have been much bolder and far less civil. If you’re interested in market history or shareholder activism then this is the book for you.

Quantitative Momentum: A Practitioner’s Guide to Building a Momentum-Based Stock Selection System
by Wesley R. Gray and Jack R. Vogel

Messrs. Gray and Vogel take readers on a trip through momentum investing as it applies to stock picking. The book is peppered with insights about what makes momentum tick and it provides empirical studies to back it up. It also reveals the reasons for momentum’s persistence and then heads off to build, and fully reveal, a stock picking system. It’s an excellent primer on the topic.

As an extra bonus, you can now grab a copy of …

Victory Lap Retirement: Work While You Play, Play While You Work – The Joy of Financial Independence…at Any Age
by Mike Drak and Jonathan Chevreau.

The new book from MoneySense’s former editor came out just a few weeks ago and has some wise words to say about staying engaged and stimulated after achieving financial independence. It’s a new world out there for retirees who should think about retirement as a new beginning rather than an ending.

I’m sure I’ve missed a few recently-published books on investing. If you know of a good one, please let me about it in the comments section or via twitter @NormanRothery.

Safer Canadian Dogs

Investors following the Dogs of the Dow strategy want to buy the 10 highest yielding stocks in the Dow Jones Industrial Average (DJIA), hold them for a year, and then move into the new list of top yielders.

The Dogs of the TSX works the same way but swaps the DJIA for the S&P/TSX 60, which contains 60 of the largest stocks in Canada.

My safer variant of the Dogs of the TSX tracks the 10 stocks in the index with the highest dividend yields provided they also pass a series of safety tests, such as having positive earnings. The idea is to weed out companies that might cut their dividends in the near term. Just be warned, it’s a task that’s easier said than done.

Here’s the updated Safer Dogs of the TSX, representing the top yielders as of November 29. The list is a good starting point for those who want to put some money to work this week. Just keep in mind, the idea is to hold the stocks for at least a year after purchase – barring some calamity.


Name Price P/B P/E Earnings Yield Dividend Yield
BCE (BCE) $58.51 4.09 18.52 5.40% 4.67%
Emera (EMA) $45.27 1.67 18.23 5.49% 4.62%
CIBC (CM) $106.01 1.94 10.26 9.74% 4.57%
TELUS (T) $42.41 3.03 17.89 5.59% 4.53%
National Bank (NA) $50.14 1.77 14.41 6.94% 4.39%
Bank of Nova Scotia (BNS) $73.70 1.69 12.69 7.88% 4.02%
Fortis (FTS) $40.93 1.45 21.77 4.59% 3.91%
Bank of Montreal (BMO) $89.14 1.54 13.21 7.57% 3.86%
Royal Bank (RY) $90.12 2.08 13.25 7.55% 3.68%
Rogers (RCI.B) $52.52 4.64 23.24 4.30% 3.66%

Source: Bloomberg, November 29, 2016

Notes

Price: Closing price per share

P/B: Price to Book Value Ratio

P/E: Price to Earnings Ratio

Earnings Yield: Earnings divided by Price, expressed as a percentage

Dividend Yield: Expected-Annual-Dividend divided by Price, expressed as a percentage

As always, do your due diligence before buying any stock, including those featured here. Make sure its situation hasn’t changed in some important way, read the latest press releases and regulatory filings and take special care with stocks that trade infrequently. Remember, stocks can be risky. So, be careful out there. (Norm may own shares of some, or all, of the stocks mentioned here.)


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