The Conceptual Foundations of Investing is designed as an accessible guide for improving investor performance that offers a clear understanding of the conceptual foundations of modern investment theory with a minimum of technical detail. The authors—three experts on the topic—help investors ask the right questions to guide them in their investment decisions. The book is not a blueprint for beating the market but a commonsense approach for understanding the conceptual basics of investing.
The book begins with a critical exploration of how to analyze investing properly by calculating and working the return on investment. Filled with exhibits, illustrative examples, and concise explanations, The Conceptual Foundations of Investing goes on to explore topics such as inflation, analysis and valuation, transaction costs, alternative investments, and much more.
While the authors avoid the complex mathematics involved that characterizes much of modern finance, the text does contain useful investment data in spreadsheets and some equations and mathematical concepts. For the non-mathematically inclined, the authors provide valuable explanations.
With a basic understanding of the foundations of investing, investors can avoid costly mistakes. One example of a typical investment error is the trade-off between risk and return. The trade-off seems to imply that if you bear more risk you will have higher long-run average returns. That conclusion is false. It is possible to bear a great deal of risk and get no benefit in terms of higher average return.
The Conceptual Foundations of Investing is a resource written for individual and professional investors who want to add active elements to their portfolio.
From the Back Cover
Praise for THE CONCEPTUAL FOUNDATIONS OF INVESTING
"There are very few people in finance who can span the divide between academia and practice, but Brad Cornell is an exception. This book is a perfect illustration of how you can answer every day investing questions with tools from finance, economics and statistics, and I strongly recommend that anyone interested in markets read it."
— Aswath Damodaran, Kerschner Professor of Finance, Stern School of Business, NYU
"Brad is one of the most insightful financial thinkers and investors in our industry. His publications and investment results put him in the most rarified peer group and make this book a must-read."
— Jason Hsu, Chairman and CIO, Rayliant Global Advisors, Co-founder, Research Affiliates
"A tour de force! Brad Cornell has made much of modern quantitative finance – in theory and practice – accessible to any intelligent investor. This should be the text for coursework on introductory finance."
— Rob Arnott, Chairman, Research Affiliates
A STRAIGHTFORWARD GUIDE TO THE FUNDAMENTAL CONCEPTS OF INVESTING, WITH A FOCUS ON ACTIVE INVESTING
"In the years following the development of the capital asset pricing model in 1964, research in finance has revolutionized the understanding of financial markets. The problem is that much of the research that produced that revolution is highly technical and mathematical, making it difficult for investors who are not experts to grasp the conceptual foundations on which the modern understanding of investing is based.
This book is designed to fill that gap. Its goal is to provide an understanding of the conceptual foundations of modern investment theory with a minimum of technical detail."
—From the PrefaceThe Conceptual Foundations of Investing offers an essential resource for individuals and professionals who want to have a clear understanding of the conceptual foundations that underpin investing. The authors have written an accessible guide for avoiding uncompensated risks and making responsible investment decisions.