INVESTMENTS: NEW ANALYTIC TECHNIQUES.

By J. Peter Williamson(Professor of Business Administration).New York: Praeger Publishers, 1971. 325pp. $12.50.

Professor Williamson introduces his newest book with a rhetorical question addressed to professional investment analysts: "Is there really any payoff to all these new analytic techniques?" The remainder of the book is a convincing answer, and it is a measure of the author's own analytic and expository skills that this extended answer is being acclaimed widely in both business and academic circles.

In the beginning there were Graham and Dodd. Then, slowly in the late 1950's but currently in full flood, came an eruption of financial theory. These new ideas at first had little impact on the financial community or even in the classroom. True, scholars could and did test the theories, but only at great expenditures of time and money. Then enter Dartmouth time-sharing and Professor Peter Williamson. Tuck School now enjoys the reputation of being the leading graduate business school in applying sophisticated techniques to practical financial problems. Much of this reputation is due to Professor Williamson's successful conversion of abstract financial theory into practical computer-based tools. Even a cursory reading of his book's contents illustrates why.

Portfolio selection and performance evaluation are major concerns of the book. The author takes the reader through the necessary background of utility and capital market theory, leading up to discussion of portfolio selection governed by a balancing of expected (or average) return and risk (or variance of return). Academic clutter and formalisms are kept to a minimum, with the result that theory and application are presented in a manner which will be (and is) appreciated by both professional analysts and students.

Intrinsic value and price/earnings regression models, as well as "technical" analyses, are described and evaluated as aids to stock valuation and selection. Additionally, bondswitching techniques are derived (and are illustrated) from the complex structure of interest rate, tax and other phenomena which can make such techniques profitable. Again, Professor Williamson reduces the complex to understandable so that novice and professional can gain from the reading.

Professor Williamson closes with the comment: "In the end, of course, it will be up to the individual analyst to decide for himself what the new analytic techniques have to offer him. I hope this book has helped with that decision" (p. 319). This reviewer and colleague is certain that reader response overwhelmingly will be affirmative, both as to helpfulness of the book and—because of the book—as to practicality of the analytic techniques.

At the Tuck School, Professor Carletonteaches Economic Environment of Business,Financial Markets and Management of Financial Institutions.