It’s Earnings That Count by Hewitt Heiserman, Jr.

Hewitt is a regular on the Fool discussion boards, and many people have written highly of his book.

I think there’s some good stuff in it, but it is by all accounts a book written for the novice. He poses a good way of rewriting an income statement into “defensive” and “enterprising” incomes (terms borrowed from Benjamin Graham) to give you insight into the quality of their earnings (how durable are they?).

He also offers a good 5-minute (though I wager more like 10-15) test to see if a company is worth investigating further. I’m going to bring that to our investment club… it could help us generate more ideas with less effort.

The last few chapters are of little utility… he poses some general philosophy for better investing and personal finance, much of which is naive or simplistic. “How can you save more money a month? Consider moving to a different part of the country where things cost less!” Um… okay.

Also, he does a short bit on valuation that is just a pile of hooey. In his defense, it’s similar to the pile of hooey that Tom Gardner of the Fool uses. And I guess it’s better than nothing, but I don’t trust valuation methods that depend on constant P/E rates.