- Paperback: 288 pages
- Publisher: Wiley; 1 edition (September 22, 2000)
- Language: English
- ISBN-10: 0471398101
- ISBN-13: 978-0471398103
- Product Dimensions: 6.1 x 0.8 x 9 inches
- Shipping Weight: 12.8 ounces (View shipping rates and policies)
- Average Customer Review: 10 customer reviews
- Amazon Best Sellers Rank: #1,407,391 in Books (See Top 100 in Books)
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Value Investing: A Balanced Approach 1st Edition
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"The book has a lot and I recommend it. It is remarkably well written for a book on finance and, perhaps most importantly, easily comprehensible."(Investment Adviser, 22 January 2001)
From the Back Cover
"Essential reading for anyone in today's turbulent markets."-Jeffrey E. Garten, Dean, Yale School of Management
Praise for MARTIN J. WHITMAN and VALUE INVESTING
"An excellent book on investments. But, more importantly, thisvolume is a primer explaining to Main Street, especially MainStreet businesspeople, how Wall Street really operates." -Eugene M.Isenberg, Chairman of the Board, Nabors Industries, Inc.
"A must read for all thoughtful investors interested in a rational,disciplined, risk-averse template for successful long-termcompounding." -O. Mason Hawkins, CFA, Chairman and CEO,Southeastern Asset Management, Inc. and The Longleaf PartnersFunds
"This author knows whereof he speaks. His many years of extremelysuccessful experience as a professional manager of investments, hisacademic training, and his period of teaching at a major universityall make their mark on this illuminating volume. It reveals how abright, analytically minded person with extensive practicalexperience studies and evaluates investments." -William J. Baumol,Professor and Director, C.V. Starr Center, NYU Professor Emeritus,Princeton University
"This book by an experienced and practicing master, Martin Whitman,is a treasure and a reference book on how to think and feel like anowner of a business without the headache of running it day to day."-Papkens Der Torossian, Chairman and CEO, Silicon Valley Group,Inc.
"Marty Whitman is renowned for his uncanny instincts and insightsin picking bargains in stocks and bonds. His book is a realbargain. To benefit from decades of Marty's experience isinvaluable and to have such a commonsense and realistic approach isan extra dividend." -Milton Cooper, Chairman, Kimco RealtyCorporation
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I gave the book three stars because he did share some insights into how the quality of a balance sheet can translate into either poorer or richer profits for a company. This is very important analysis, since it cannot be found and explained anywhere else, yet makes a lot sense when you are trying to value a company, and it is highly relevant information regardless of whether you are a retail investor or a hedge fund manager. Those insights, unfortunately, are a small part of the book.
Equally unfortunate are two other items: the writing style and misclassification of Ben Graham's role in investing history. His style is painfully dry, and I suspect he is still a recovering lawyer :) .
In addition, he makes it a point not to classify Graham and Dodd as value investors. I know his point is that much of their success came from capital appreciation, not from taking control positions in a business (a point made over and over and over again), but this kind explanation can miseducate the uninitiated. For anyone reading: Ben Graham is considered the FATHER of value investing, and literature from all other reliable sources will correctly name him as such.
His first outing, The Aggressive Conservative Investor, is better in many ways, but is still turgidly written.
Given Whitman's talents, track record and reputation for smarts, this is a real let-down.
I agree with the previous reviewers that the author is obsessed with attacking academic finance. He is aware of this: on page (xiii) he starts the book by saying "Many may view this book as a direct attack on academic finance; there is somehing direct to this view." Unfortunately, his attacks are based on issues that are at best irrelevant to value investing. Who cares if algebrea is needed read Brealey and Myers, but "for reading THIS (emphasis by the author) book" it is "useless." If anything, Brealey and Myers make it clear that understanding finance requires strong analytical skills.
On the other hand, more serious attacks are groundless. On page 215, author states "Scholars are way off base in four areas." He goes on to describe these four areas as follows. "They misdefine markets ... In attempting to ascertain the social value inherent in rehabilitating troubled companies, scholars tend strongly to think only in terms of value as measured by immediate market prices for outstanding securities...In thinking about values in reorganization, scholars tend to think in terms of cash values, not present values...Scholars seem to think that the costs of bankruptcy are huge, precluding many management from seeking Chapter 11 relief."
With respect to the first three issues, there is no scholar at a respectable academic instituiton and/or published at a respectable journal making these arguments. With respect to the fourth issue, the author continues by saying " The costs ARE (emphasis bby the author) huge, but they are borne by companies, not managements." So what the scholars "seem to think" (i.e. that the costs are huge) is not "off base" after all, as the author also agrees. On the other hand, the last sentence quoted above by Whitman also suggests as if some scholars are arguing that the costs are borne by management. Again, no scholar at a respectable academic instituiton and/or published at a respectable journal making these arguments. Perhaps the author is exposed to third tier journals and third tier academics only.
I am disappointed that despite his limited exposure to academic finance, Whitman is convinced that academics are of one mind. As with many professions and many issues, there is disagreement among academics on many issues as well. Sadly, the areas he quotes above are not even among those issues. I challenge Whitman to back up his statements above by citing the scholars he is talking about so that we can all know what study he has in mind.
Practioners have much to learn from the knowledge of academics and the academics have much to learn from the experience of practitioners. Unfortunately, the author's obsession with academics makes him both deaf and mute.