STREET WISE by Amey Stone

LEARN HOW TO VALUE STOCKS? INVESTORS YAWN

You can count on Wall Street professionals to put a positive spin on the market -- even when it's doing something as irrefutably bad as going down. For the past month, many investment pros have said the silver lining in a market correction would be a return to more rational pricing of stocks.

What they mean is the way Wall Street values companies -- on a multiple of future earnings, or discounted future cash flow -- would start to matter again. For much of this bull market, the best indicator of whether a stock would go up has been if it was already going up. That's because many investors today favor so-called momentum investing and have stuck to blue chips, high-tech favorites, and index funds -- regardless of price.

Some mutual fund managers have expressed the hope that they'd start seeing a stock-picker's market, where companies that were selling at a cheap price relative to their competitors, or that were cheap based on a carefully calculated "intrinsic" value, would be the ones to rise in value.

We aren't there yet. The market may be down 7% from its July 17 high, but the investing public's appetite for security analysis has hardly resurfaced. Consider this small test: On Aug. 18, Jeffrey C. Hooke, author of Security Analysis on Wall Street, signed books and gave a talk at Borders Books in New York City's World Trade Center. The 304-page tome is an honest attempt to teach laymen how to value stocks by sharpening pencils and running through some financial calculations.

But even in the heart of New York's financial district, not more than a few dozen people showed up. Hooke, who was quite happy with the attendance, told them why it was important to learn how to value stocks on their own. He criticized "sell-side" stock analysts as biased and said many stockbrokers don't know how to value stocks. "Do your own work, your own thinking, and then make your own decision," he said.

He told them the book wouldn't help them find the next hot stock or make a million in the market. His only promise: knowing these tools would help them avoid overhyped "torpedo" stocks where expectations are already so far beyond what the company can achieve that it's inevitable they will disappoint. "If you can improve your odds just slightly, and beat the market 51% of the time, you will be a superstar."

This may not have been the message the audience wanted to hear. Although they seemed to enjoy Hooke's talk, when it came time to ask questions, few were on point. Several people were interested in Internet stocks and seemed disappointed when Hooke said they've already surpassed any rational valuation models -- and if you followed the tenets of his book, you would stay away. When the signing was over, very few in the audience bought the book, which may have more to do with its $69.95 price tag than anything else.

But Hooke, who is hoping his book will become the modern-day version of Graham and Dodd's famous Security Analysis, knows he doesn't have an immediate best-seller on his hands. "A lot of people don't like to do this anymore," he says. "It is too much work." But that could change, he says. "In a bear market, people will go back to the old techniques," says Hooke. "They always do."

Looks like the market will have to do a lot worse before Hooke's book takes off. He says he doesn't know the latest sales figures, but here's a quick and dirty test: Amazon.com includes a sales ranking for all its books. Hooke's rated 7,543 on Aug. 19. Contrast that to the sales of The Electronic Day Trader, by Marc Friedfertig and George West, another new and highly technical investment book, but one that advocates rapid-fire investing based largely on blips on charts. That book is now on Business Week's Best-Seller List, and is 17th in total sales on Amazon. By this measure, investors aren't interested in in-depth security analysis now. Hmm, maybe Hooke's next book will be about market timing...

Stone thinks most investors would be a lot better off learning about security analysis than day trading