41 of 42 people found the following review helpful:
4.0 out of 5 stars
Excellent all around introduction, May 11, 2000
Some reviewers criticize Lowe, claiming 1) the book is too simple, 2) she simply quotes people like Buffet, Graham and Lynch, and 3) she doesn't explain her calculations enough. I disagree on all counts! You really should take a look at this book; it's an excellent all around introduction.
1. Is the book too simple? No, it's supposed to be simple. Lowe herself explains in the title, and in the preface, that this book is meant to be ``Graham and Dodd made easy''. She did a good job; that's just what the book is. After you read this book, you should think about moving on to Graham and Dodd--but this book is a good start.
2. What's wrong with quoting successful folks like Buffet, Graham and Lynch? Remember, this book is ``Graham and Dodd made easy'', so it's bound to contain lots of references to Graham and Dodd. Naturally, it also contains quotes from Graham's most successful disciple, Warren Buffet. The quotes are well chosen, so Lowe has done us a service. She has distilled the wisdom of the master.
3. Should Lowe make recommendations, like ``use this formula; don't use that one''? I don't think so. The problem with value investing is that no one formula perfectly captures business worth. If there were a simple formula, then everyone would be a millionaire. The fact is that you need to know several different ways of looking at company value. Each way is reasonable. Your personality, viewpoint and tolerance for uncertainty decides how you weight these different variables. However you do it, you will be exactly as successful as you are careful and businesslike.
So all around, I think this book is an excellent introduction to value investing. It captures the spirit of great investors, while remaining readable and clear. Well worth your time.
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18 of 18 people found the following review helpful:
1.0 out of 5 stars
Nice Try - A misinterpretation of the concepts, July 17, 2002
I like the idea, but...
Having recently undertaken the wonderful journey of studying Benjamin Graham and Warren Buffett through reading most of their writings, I felt obligated to comment on this book. Many important concepts are nicely explained, and the format is pleasing, however, a disturbingly significant number of facts presented are gross misinterpretations.
The author does a nice job of explaining commonly used Wall Street terminology and concepts, for the novice. However, she fails in the infinitely more important task of consistently explaining the core concepts of investing (and not just stock speculating -- as so many of us all too often do).
Two (among the many) misleading points involve investment diversification and Buffett's used cigar-butt approach. She implies both Graham and Buffett whole-heartedly embrace diversification. Unless I have been reading the wrong Graham and Buffett, they certainly do not do so, unconditionally. The author further misrepresents Buffett when she actually leaves it that he finds the "cigar butt" approach, a wise way to buy businesses. He indeed called that method, "foolish" [Mr. Buffett: if that is no longer the case, please excuse my error.]
If you are searching for enlightenment, the way I was, you will be 1000 times better served to read "The Essays of Warren Buffett", arranged by Cunningham and, of course, Graham's "The Intelligent Investor".
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9 of 9 people found the following review helpful:
4.0 out of 5 stars
Key Lesson- Stick to the Proven Performers, January 3, 2006
The author touts the book as a distillation of the key concepts of Benjamin Graham's classic text, Security Analysis, but fails to elaborate on a key point repeatedly mentioned in Graham's book. Graham noted that at times, some bonds make for better investments than stocks as a class of investments, and at other times, some stocks make for better investments than bonds as a class. This readily follows from Graham's definition of an investment, which he stated most succinctly in his book for the novice investor, The Intelligent Investor:
An investment is any activity which provides safety of capital with a reasonable expectation of income. All other activities are speculative.
Lowe's book concentrates solely on stocks, and ignores the potential of bonds as an investment. As a result, the book distills only some of the wisdom of Security Analysis, which, by the way, can be found in a more accessible form in Graham's book, The Intelligent Investor.
By saying this, I do not mean to imply that Value Investing Made Easy is not a worthwhile read. Rather, it is the book the novice should read if and only if he or she does not want to spend the time reading Graham's Security Analysis, a formidable text nearly a thousand pages long (however, in Graham's defense, most of these pages are devoted to graphs, charts and numerous examples of the application of his techniques).
Lowe's book presents most of the important tenets necessary for picking stocks along the lines of Graham and Dodd (and Warren Buffett). A careful reader will notice, however, that the stock universe for which the tenets are applicable limits him or her to solely the proven performers. Among other things, these stocks typically, but not always, pay dividends, or have a history of doing so.
I found the text to be somewhat of a letdown because most of it was devoted to the justification for value investing, and not on the techniques of value investing per se. The book relied heavily on notable anecdotes- star performers of value investing fame such as (yep, you guessed it) Warren Buffett, Irving Kahn and others, and a bit less on the techniques in action as I would have liked.
However, in its defense, the book contains several pearls of wisdom that the novice investor would do well to know like the back of his or her hand. The book lays down an appropriate definition for intrinsic value, provides a satisfactory explanation of the role and importance of assets and dividends, and most important, the use and limitations of long-term trends in earnings and dividends to make assessments of stock investments.
On a personal note, I feel the most important lesson of the book is contained on Page 20 of the text- How Trustworthy Are the Numbers? Here, Graham warns us that, "Deliberate falsification of the data is rare; most of the misrepresentation flows from the use of accounting artifices, which it is the function of the capable analyst to detect. Concealment is more common than misstatement."
I leave the potential reader with one critical admonishment taken from the text (Page 21) which is perhaps the most relevant of all of Graham's tenets for the novice investor:
"When an enterprise pursues questionable accounting policies, all of its securities must be shunned by the investor, no matter how safe or attractive some of them may appear."
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