Value Trap

“Over 30 years as an investment advisor, I have been asked so many times to suggest “a book that teaches me how to do all this (investing) stuff?” My response has always been along the lines of, “Don’t you realize that people spend $100,000 and more on MBA’s in finance or go through the grueling process of getting their CFA certification–one of the hardest post-graduate exams out there? Many more have spent 20 or 30 years actually investing other people’s money, and you really think you can read one book and match wits with these people?” Well, Brian, you did it. I can now honestly recommend this book to anyone, and confidently say, “If you read it, understand it, and (the hardest part) actually utilize it, you will have the tools to invest successfully on your own.” – William Deshurko Investment Advisor, 401 Advisor, LLC


My above endorsement is included in Brian Nelson’s new book, ” Value Trap: Theory of Universal Valuation”. I’ve read dozens of books on economics, investment theories and biographies. While many are well worth the read, this is truly one of the few books that can be used as a “How to” when it comes to investing.

Brian is a former Director of Methodology at Morningstar, Inc. The company that made “Star Ratings” famous for mutual fund investors. As they branched into stock research Brian was instrumental in creating their research methodology. Now he is President of Investment Research for his firm, Valuentum, Inc.

The value of the book is two fold. What so many confuse is the difference between a stock’s price and it’s value. The “Efficient Market Theory” (very academic and rather real world useless) states that a stock’s price is its value. But casual observation proves this not to be true as an individual stock’s price may fluctuate by 10% or more in just a single day. Valuation is the process of determining a stock’s value regardless of price. Stocks have a value, primarily based on earnings. Brian’s methodology, while not necessarily simple, arrives at a very solid range for a stock’s value.

What does this mean to an investor? Simple. Buy when a stock is under valued. Right? But to do so, one needs an accurate and accepted assessment of value. Deciding a stock is worth $100 a share doesn’t do an investor any good if all other investors feel it’s only worth $80 a share. The second step is the money maker. Knowing when to buy, every value investor has bought a stock only to watch its price languish, or worse drop further testing resolve and patience. We have all also seen stocks continue up in price, when by all accounts they are overvalued. Knowing when to buy and when to sell is key. Brian’s use of momentum is priceless.

The Valuentum methodology is something we’ve been incorporating into our investment process at 401 Advisor, LLC for the last several years. If you’d like to find out more give me a call 937.434.1790 or send me an email at bill@401Advisor.com.

For more information or to order a digital copy of the book you can go to www.valuentum.com

Mr. DeShurko is a registered representative of Ceros Financial Services, Inc, (Member FINRA/SIPC). Ceros is not affiliated with 401 Advisor, LLC or Fund Trader Pro. The views expressed are those of Mr. DeShurko and do not necessarily reflect those of Ceros Financial Services, Inc., its employees or affiliates.  Past performance is no guarantee of future results. 
All investing involves risk.

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2 Responses to “Value Trap”


  1. 1 William Hepburn March 21, 2019 at 2:19 pm

    Bill, I enjoy your newsletter and the layout is terrific. Kudos.

    Since you did a book review, I though you might enjoy the book I wrote last year, Why Bad Things Happen to Good Investments. It is getting good reviews and sales are rising steadily. It is sort of like 30 years of my best hits while teaching and talking with clients. A copy is going in the mail to you today. I hope you enjoy it as much as Value Trap.

    Best regards,

    The information in this email is confidential and is intended solely for the addressee. If you are not the intended addressee and have received this email in error, please reply to the sender to inform them of this fact. Any disclosure, copying, distribution or any action taken in reliance on information contained herein, is prohibited and may be unlawful by anyone other than the legally intended recipient.

    We cannot accept trade orders through e-mail. Important letters, e-mail, or fax messages should be confirmed by calling (928) 778-4000. This email service may not be monitored every day, or after normal business hours.

    • 2 Bill DeShurko March 21, 2019 at 3:44 pm

      Thanks Will, happy to read and review. I miss the NAIIM group, but keep having conflicts on the conference dates.


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