Value Investing: From Graham to Buffett

Description

Let some of the best investors in the world teach you how to be on the right side of the trade. The first edition of Value Investing: From Graham to Buffett and Beyond was published in 2001. It is still in print, having sold over 100,000 copies. It has been translated into five languages. Business school professors still assign it in their courses. But in the 20 years since the first edition, the economy has changed, the investment world has evolved, and the discipline of value investing has adapted to this new environment. This second edition responds to these developments. It extends and refines an approach to investing that began with Benjamin Graham and David Dodd during the Great Depression and was adapted by Warren Buffett, Charlie Munger, and others to earn returns in an environment in which the opportunity to buy a stock worth a dollar for 50 cents is no longer waiting in plain sight. The foundation of this book is the course on value investing that Bruce Greenwald taught at Columbia Business School for almost a quarter century. His aim in the course, and our aim in the book, is to help the investor operating in the Graham and Dodd tradition find him or herself on the right side of the trade. The steps include searching for the right securities, valuing them appropriately, honing a research strategy to devote time to the right activities, and wrapping it all within a risk management practice that protects the investor from permanent loss of capital. The book has been revised throughout, but the biggest change is the addition of more than two chapters on the valuation of growth stocks, which has always been a problem for investors trained in the Graham and Dodd tradition. Successful value investing practitioners have graced both the course and this book with presentations describing what they really do when they are at work. There are brief descriptions of their practices within, and video presentations available on the web site that accompanies this volume: In addition to a selection of Warren Buffett’s letters, there are presentations by Mario Gabelli, Glenn Greenberg, Paul Hilal, Jan Hummel, Seth Klarman, Michael Price, Thomas Russo, and Andrew Weiss. Although their styles vary, they all are members in good standing of the Graham and Dodd tradition. Review: Must Read book for serious, hands-on Equity investors - This is a monumental achievement by Bruce and team. The authors are very experienced professor and practicing Investors (plus adjunct professors in Columbia). I have read the first edition of the book at least 3 times in the last 10 years. The new edition builds on that good work and adds substantial content in this edition. The first edition kept harping on deep value investing and discourages paying up for quality stocks. In this edition they corrected that bias and expanded upon the valuation and analysis of high quality compounders as most value investors today focus on Quality. What is impressive in this book is the case studies for every valuation method they have espoused in the book- Replacement value, Earning Power Value and Franchise with Growth valuation. These are actual companies with real data. The book is not just about valuation. It covers a lot of ground on Equity Analysis of companies including industry maps, competitive advantage analysis etc. What it lacks is analysis of management and forensic analysis to detect frauds. The second part is deep dive into various investing greats and their respective investing methods. Invaluable for new investors to zero in on the investing style that suits them from this menu. Overall a gem of a book and must read for serious investors. Just be mindful that this book is serious body of scholarship and new investors may find it difficult to follow. There are some Prerequisites for getting the best out of this book- 1. Solid grounding in corporate finance including concept of Time value of money, Capital structure, dividend policy etc. 2. Financial statement analysis - Income, balance sheet and cashflow statement - structure and components of these three. You need very high competency in the financial statements to understand this book. But then this book is written for Columbia business school investing MBAs and professional investors! But those serious investors (Or CAs and MBAs) equipped with the above prerequisite knowledge can derive lot of value from this "How To" Manual. I will advise the serious students to apply the methods on multiple stocks to imbibe the concepts. You need multiple high quality reps to get better. I personally use the methods described in this book regularly when I analyze and value stocks. Serious investors can also look at Valuation book written by Stephen Penman. Review: Pure technical book - Its pure technical book. Understanding of concepts from this book and implementation is very difficult.Only qualified CA people can able to understand i think.