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Montier's Teaching Points on Stock Valuation

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First outline, and then summarize your understanding of Montier's teaching points on "Stock Valuation".

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This solution of 554 words outlines and summarizes Montier's teachings on Stock Valuation.

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Stock Valuation by James Montier


First, Montier skims through the Keynesian model which is understandable because his book, Behavioural Finance, is not about the macroeconomic impacts and outcomes of the private sector's financial and economic decisions. Then, he discusses the importance of the analysis of fundamentals in stock valuation. What is interesting is that he also discusses when fundamentals should be thrown out of the window so to speak. The bulk of the chapter is devouted to the discussion of the most common and fundamental stock valuation model - the capital asset pricing model (CAPM). Moreover, variations on the CAPM such as the multifactor models are discussed extensively. Also, the very attractive but elusive concept of arbitrage is explained eloquently. In closing, Montier gives final points and guides for stock analysts which can also be ...

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