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The Aggressive Conservative Investor
"The Aggressive Conservative Investor will never go out of date. Regulation, disclosure, and other things may change, but the general approach and mindset to successful investing are timeless. Read this book and you will learn the rudiments of 'safe and cheap' investing. An essential read for every amateur and professional investor."
--Stan Garstka, Deputy Dean & Professor in the Practice of Faculty & Management, Yale School of Management "Security analysis toward both better odds and higher long-term payoff: A readable, authoritative guide."
--Professor Bill Baumol, New York University "In reading this book, one is struck by the simplicity of the ideas and the dependence of the investor on his own understandings of reality as opposed to the myths on the street. The updated version of this 1979 classic incorporates all the modern financial engineering that has occurred as a product of the late 20th century, and the new methodologies refine your abilities to measure risk but don't change the fundamentals of value. The updated version of The Aggressive Conservative Investor is very much a value-added proposition."
--Sam Zell, Chairman, Equity Group Investment LLC "I concur with those people who regard Marty Whitman as the 'Dean of Value Investing.' This book is a must-read for everyone interested in understanding the art of investing."
--Melvin T. Stith, Dean, Whitman School of Management, Syracuse University This no-holds-barred presentation of one of the most successful investment strategies of all time -- value investing in distressed securities/companie -- shows you how to analyze and evaluate stocks just like controlling owners. Based on the assumption that stock price rarely reflects real value, authors Whitman and Shubik use numerous case studies to present risk-minimizing methods that also provide high rewards. Still relevant today, this classic work includes a new introduction discussing the dramatic changes that have taken place in the value investing world since its first publication in 1979.
--Stan Garstka, Deputy Dean & Professor in the Practice of Faculty & Management, Yale School of Management "Security analysis toward both better odds and higher long-term payoff: A readable, authoritative guide."
--Professor Bill Baumol, New York University "In reading this book, one is struck by the simplicity of the ideas and the dependence of the investor on his own understandings of reality as opposed to the myths on the street. The updated version of this 1979 classic incorporates all the modern financial engineering that has occurred as a product of the late 20th century, and the new methodologies refine your abilities to measure risk but don't change the fundamentals of value. The updated version of The Aggressive Conservative Investor is very much a value-added proposition."
--Sam Zell, Chairman, Equity Group Investment LLC "I concur with those people who regard Marty Whitman as the 'Dean of Value Investing.' This book is a must-read for everyone interested in understanding the art of investing."
--Melvin T. Stith, Dean, Whitman School of Management, Syracuse University This no-holds-barred presentation of one of the most successful investment strategies of all time -- value investing in distressed securities/companie -- shows you how to analyze and evaluate stocks just like controlling owners. Based on the assumption that stock price rarely reflects real value, authors Whitman and Shubik use numerous case studies to present risk-minimizing methods that also provide high rewards. Still relevant today, this classic work includes a new introduction discussing the dramatic changes that have taken place in the value investing world since its first publication in 1979.
480 pages, Paperback
First published January 1, 1979
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1637 people want to read
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Displaying 1 - 16 of 16 reviews
July 10, 2014
The Aggressive Conservative Investor focuses exclusively on value investing....specifically in distressed securities, which is a different approach than Warren Buffet's value strategy. The authors, writing in the 1970's, take an analytical approach to value and also assesses value as if you were a controlling owner. The approach is sound and the fundamentals are well-defined. The authors are undoubtedly intelligent....highly intelligent actually. However, the book is dry....a tough read. I always judge a book based on the amount of knowledge I will remember and use for years into the future; I must admit that there was little that will stick in my brain from this book. I am not recommending.
December 9, 2010
Not the most readable text, but quite consistently thought provoking. The authors challenge a few tenets of the Graham-Dodd value investing approach -- such as the assumption that companies are going concerns -- and also distance themselves from the Berkshire Buffett's ROIC approach which depends a lot on control of the target company. At the very least it is more intelligent than any of Lynch's rather awful books. What I like is how Whitman and Shubik approach the topic almost as philosophers -- they lay out their assumptions of the markets, think through the implicit assumptions of GAAP accounting and explain its role to its various readers (not just equity investors but creditors and regulators), explain through the use of numerical case studies how a skilled banker might approach acquisitions (and thereby corporate valuation) with the use of debt or tax shelters, and generally argue through their case for what they call the 'financial integrity' approach.
Its 4 tenets are not so very controversial or unique, given the widespread influence that value investing has today:
1. Strong financial position (relative absence of liabilities, existence of high quality assets, free cash flows available to shareholders)
2. Reasonably honest management
3. Reasonably transparent disclosure
4. Price below reasonably estimate of fair value
Don't you love how everything is about being 'reasonable'? Terribly subjective and after all, value investing is never about theory but effective practice. In this regard this book is better than others because more so than other texts it offers various case studies, some simple/abstract and other long/concrete, that put flesh on their statements.
Finally, rather than being knee-jerk dismissive of other approaches, e.g. trading, they explain why, given their assumptions, such as that overall market direction cannot be forecast, such other approaches are not viable. This is great because it allows one to disagree -- e.g. even if market direction cannot be forecast *with certainty*, it does not necessarily approach a random walk; as long as direction can be described in terms of asymmetric probability, this can give rise to high probability trading strategies, i.e. have a positive expectation over a series of trades.
*****
Other notes:
WACC doesn't take into account cash interest cost (debt) vs non cash cost (equity); retained earnings are often the company's main capital source, ROE here is good indication of its cost.
Money managers may not always seek total return -- e.g. insurance coy may prefer underperformance in equity port that however throws off enough cash to meet liabilities; safe and 'good enough' income hurdle rate.
Good fundamental analysisinvolves perception, training, understanding, and a high degree of abstraction in both implicit and explicit model building.
Abstract economic theory is critically impt in interpreting and understanding tendencies in economic systems; but tendencies shd not be confused with actualities.
Distressed/special situation investor -- emphasises price of issue rather than quality of issuer; requires hard work, large degree of know how, assumes that investor knows more about the particular situation than the market; the most successful place important BUT NEVER SOLE emphasis on the 4 essential elements of the fin-integrity approach;
Cash return investor -- emphasis on quality of issuer rather than price, key qn is security of cash flows.
SEC filings: what may be missed --
-failure to do adequate maintenance/replacement capex, would require big future catchup capex when obsolete equipment leads loss of competitiveness, sales and margins
-M&A potential
-cost competitiveness
-mkt penetration
-soft info like internal targets budgets, asset valuations, forecasts
Financial accounting -- to enable owners/creditors to make decisions
Cost accounting -- to tell management what the costs are
Tax accounting -- to minimise income taxes paid
Common errors:
1. Some analysts think one can gauge the comparative efficiency of companies, esp manu coys, from public data alone -- this cannot be done without access to internal cost data, which the analyst may not be qualified to use (big statement -- and big factor behind their balance sheet approach)
2. Undue emphasis on the income statement
3. Where the 4 standards of fin-integrity are met, comparative analysis tends to become secondary
Value is not a monolithic concept. Whether something is attractive or not at a given price depends on the position of the people involved and what they want out of a deal.
Its 4 tenets are not so very controversial or unique, given the widespread influence that value investing has today:
1. Strong financial position (relative absence of liabilities, existence of high quality assets, free cash flows available to shareholders)
2. Reasonably honest management
3. Reasonably transparent disclosure
4. Price below reasonably estimate of fair value
Don't you love how everything is about being 'reasonable'? Terribly subjective and after all, value investing is never about theory but effective practice. In this regard this book is better than others because more so than other texts it offers various case studies, some simple/abstract and other long/concrete, that put flesh on their statements.
Finally, rather than being knee-jerk dismissive of other approaches, e.g. trading, they explain why, given their assumptions, such as that overall market direction cannot be forecast, such other approaches are not viable. This is great because it allows one to disagree -- e.g. even if market direction cannot be forecast *with certainty*, it does not necessarily approach a random walk; as long as direction can be described in terms of asymmetric probability, this can give rise to high probability trading strategies, i.e. have a positive expectation over a series of trades.
*****
Other notes:
WACC doesn't take into account cash interest cost (debt) vs non cash cost (equity); retained earnings are often the company's main capital source, ROE here is good indication of its cost.
Money managers may not always seek total return -- e.g. insurance coy may prefer underperformance in equity port that however throws off enough cash to meet liabilities; safe and 'good enough' income hurdle rate.
Good fundamental analysisinvolves perception, training, understanding, and a high degree of abstraction in both implicit and explicit model building.
Abstract economic theory is critically impt in interpreting and understanding tendencies in economic systems; but tendencies shd not be confused with actualities.
Distressed/special situation investor -- emphasises price of issue rather than quality of issuer; requires hard work, large degree of know how, assumes that investor knows more about the particular situation than the market; the most successful place important BUT NEVER SOLE emphasis on the 4 essential elements of the fin-integrity approach;
Cash return investor -- emphasis on quality of issuer rather than price, key qn is security of cash flows.
SEC filings: what may be missed --
-failure to do adequate maintenance/replacement capex, would require big future catchup capex when obsolete equipment leads loss of competitiveness, sales and margins
-M&A potential
-cost competitiveness
-mkt penetration
-soft info like internal targets budgets, asset valuations, forecasts
Financial accounting -- to enable owners/creditors to make decisions
Cost accounting -- to tell management what the costs are
Tax accounting -- to minimise income taxes paid
Common errors:
1. Some analysts think one can gauge the comparative efficiency of companies, esp manu coys, from public data alone -- this cannot be done without access to internal cost data, which the analyst may not be qualified to use (big statement -- and big factor behind their balance sheet approach)
2. Undue emphasis on the income statement
3. Where the 4 standards of fin-integrity are met, comparative analysis tends to become secondary
Value is not a monolithic concept. Whether something is attractive or not at a given price depends on the position of the people involved and what they want out of a deal.
December 18, 2023
Basically Low Price to Book ratios are their obsession
'Security analysis toward both better odds and higher long-term payoff: A readable, authoritative guide.'
William Baumol, New York University
.......
Amazone
4.0 out of 5 stars A great book
8/10
This book accomplishes two quite different things, both of which should be of use to the committed investor. First of all, it sets forth an investment philosophy in great detail. Second, it shows investors how to analyze securities themselves. In both those respects, it is on a par with Securities Analysis by Graham and Dodd (also highly recommended - I have also reviewed that book), although it is a much easier read.
In setting forth an investment philosophy, the book compares well with Common Stocks and Uncommon Profits by Phil Fisher and The Intelligent Investor by Benjamen Graham (both recommended).
Whereas Fisher emphasized growth companies and management analysis and Graham emphasized earnings, Whitman and Shubik emphasize low price/book ratios. They support their position quite ably with examples and, where available, studies.
The Aggressive Conservative Investor also contains a good bit of information about securities analysis. While it is not as in-depth as 'Security Analysi'" (the Graham and Dodd classic), the chapters on financial accounting and GAAP are a must read, particularly since the book convincingly demonstrates that the utility of financial statements will differ depending upon the position of the person reviewing them.
Whitman and Shubik are most certainly value investors who focus on analyzing a particular company (as compared to the market as a whole, interest rate trends, etc.), although they also cover "asset conversion investing," which may involve investing in distressed companies.
They make an excellent argument that, in many cases, companies with unencumbered assets may make excellent investments. They also freely take exception to accounting conventions that emphasize earnings, and they repeatedly demonstrate how earnings may be affected by accounting policies that are beyond the control (and arguably the understanding) of most investors, including me.
Another interesting thing about this book is that it covers different corporate constituancies (banks, bondholders, management, insurance companies, passive outside shareholders, etc.) and how their involvement affects and is affected by corporate activities in great detail. The book notes that even investors in common stock may have different objectives, and it discusses how these perspectives may affect the company over time.
The book also has an excellent discussion of sources of corporate disclosure, in order to take advantage of the company's public communications to understand it better. While I am generally aware of many of these sources, the book does a commendable job of explaining them in greater detail.
The Aggressive Conservative Investor does contain some numeric analysis that may be hard to follow, and it can't be called an "easy read," although it certainly is not as hard to read as 'Security Analysis'.
Moreover, some of the information contained in the book is now outdated due to changes in the tax code. These are minor concerns to me, however, and I would highly recommend this book to anyone who is serious about investing.
Befragt
......
A good companion to The Intelligent Investor
8/10
This book was written by two (now wildly successful) fund managers. The prose and style is clearly mid-70s, but the advice is still sound.
In particular, I liked the contrarian recommendation to buy companies w/ LOW margins. That accompanied with mean reversion of sectors gives you plenty of bang for your buck.
The differentiation of economic and accounting earnings - I have yet to see this descirbed anywhere else. I also have yet to see a sell-side analyst understand this concept.
There are also many good real world examples that we find occuring again and again and again and again....this alone makes it worth the read.
That being said, getting through this was a slog. It felt too much like a dry text book. Maybe I am a victim of flashier editing that is in vouge these days....
Franz K.
......
"Financial Integrity" & Insider Incentives
8/10
Martin Whitman's "The Aggressive Conservative Investor" has valuable and not so valuable aspects - the book offers knowledge and experienced insight but, as others have pointed out, it has imperfections. As to what is valuable, the following stands out:
1. The insight that what works in investment is not limited to a going concern analysis. The Author identifies situations that qualify under the "financial integrity approach" (also referred to as the "safe and cheap approach"). These situations involve an asset conversion of some sort - a merger, restructure, recapitalization, creation of a tax shelter etc. According to the Author, this is where wealth creation occurs.
2. The view that stockholders, management and other relevant parties to a company are best viewed as "combinations of conflicts of interest and communities of interest".
3. A realist's view on the position of the outside minority shareholder (The "OPMI" - Outside Passive Minority Interest). As stated in the book "the various participants in our systems economic life seek to obtain edges which benefit them and/or those most closely associated with them." Rather than taking a shareholder's position in isolation, an outside investor should look at the interests involved, and understand their position in relation to those interests. Simple - yes, but a relatively uncommon view in financial markets.
4. The concept and explanation of the "market bail-out" - I.e. an insider takes advantage of elevated market prices in excess of what the corporation is worth in the private market. Whitman explains how the outsider will typically go about taking advantage of this discrepancy through issuance of equity, or merger transaction etc.
As for the imperfections:
1. Repeated misrepresentations of Graham and Dodd. In Philosophy & the study of logical fallacies, I believe they call these red herring arguments.
2. Overly complicated and verbose writing (the academic approach).
Notwithstanding these fairly minor blemishes, I give the book four stars. Practical and insightful guidance from a knowledgable investor, and a different way to view the investment landscape.
JS
.......
Still worth the read in 2019
8/10
For those that have read Security Analysis, I imagine you would gain a similar level of appreciation reading Whitman's work. Both books have large portions delving into accounting or regulatory conventions that are no longer applicable.
However as it was reading Graham and Dodd, reading how Whitman thinks about various investment scenarios and his underlying investing principles was enjoyable in its own right and can still inform a value oriented process today.
as
'Security analysis toward both better odds and higher long-term payoff: A readable, authoritative guide.'
William Baumol, New York University
.......
Amazone
4.0 out of 5 stars A great book
8/10
This book accomplishes two quite different things, both of which should be of use to the committed investor. First of all, it sets forth an investment philosophy in great detail. Second, it shows investors how to analyze securities themselves. In both those respects, it is on a par with Securities Analysis by Graham and Dodd (also highly recommended - I have also reviewed that book), although it is a much easier read.
In setting forth an investment philosophy, the book compares well with Common Stocks and Uncommon Profits by Phil Fisher and The Intelligent Investor by Benjamen Graham (both recommended).
Whereas Fisher emphasized growth companies and management analysis and Graham emphasized earnings, Whitman and Shubik emphasize low price/book ratios. They support their position quite ably with examples and, where available, studies.
The Aggressive Conservative Investor also contains a good bit of information about securities analysis. While it is not as in-depth as 'Security Analysi'" (the Graham and Dodd classic), the chapters on financial accounting and GAAP are a must read, particularly since the book convincingly demonstrates that the utility of financial statements will differ depending upon the position of the person reviewing them.
Whitman and Shubik are most certainly value investors who focus on analyzing a particular company (as compared to the market as a whole, interest rate trends, etc.), although they also cover "asset conversion investing," which may involve investing in distressed companies.
They make an excellent argument that, in many cases, companies with unencumbered assets may make excellent investments. They also freely take exception to accounting conventions that emphasize earnings, and they repeatedly demonstrate how earnings may be affected by accounting policies that are beyond the control (and arguably the understanding) of most investors, including me.
Another interesting thing about this book is that it covers different corporate constituancies (banks, bondholders, management, insurance companies, passive outside shareholders, etc.) and how their involvement affects and is affected by corporate activities in great detail. The book notes that even investors in common stock may have different objectives, and it discusses how these perspectives may affect the company over time.
The book also has an excellent discussion of sources of corporate disclosure, in order to take advantage of the company's public communications to understand it better. While I am generally aware of many of these sources, the book does a commendable job of explaining them in greater detail.
The Aggressive Conservative Investor does contain some numeric analysis that may be hard to follow, and it can't be called an "easy read," although it certainly is not as hard to read as 'Security Analysis'.
Moreover, some of the information contained in the book is now outdated due to changes in the tax code. These are minor concerns to me, however, and I would highly recommend this book to anyone who is serious about investing.
Befragt
......
A good companion to The Intelligent Investor
8/10
This book was written by two (now wildly successful) fund managers. The prose and style is clearly mid-70s, but the advice is still sound.
In particular, I liked the contrarian recommendation to buy companies w/ LOW margins. That accompanied with mean reversion of sectors gives you plenty of bang for your buck.
The differentiation of economic and accounting earnings - I have yet to see this descirbed anywhere else. I also have yet to see a sell-side analyst understand this concept.
There are also many good real world examples that we find occuring again and again and again and again....this alone makes it worth the read.
That being said, getting through this was a slog. It felt too much like a dry text book. Maybe I am a victim of flashier editing that is in vouge these days....
Franz K.
......
"Financial Integrity" & Insider Incentives
8/10
Martin Whitman's "The Aggressive Conservative Investor" has valuable and not so valuable aspects - the book offers knowledge and experienced insight but, as others have pointed out, it has imperfections. As to what is valuable, the following stands out:
1. The insight that what works in investment is not limited to a going concern analysis. The Author identifies situations that qualify under the "financial integrity approach" (also referred to as the "safe and cheap approach"). These situations involve an asset conversion of some sort - a merger, restructure, recapitalization, creation of a tax shelter etc. According to the Author, this is where wealth creation occurs.
2. The view that stockholders, management and other relevant parties to a company are best viewed as "combinations of conflicts of interest and communities of interest".
3. A realist's view on the position of the outside minority shareholder (The "OPMI" - Outside Passive Minority Interest). As stated in the book "the various participants in our systems economic life seek to obtain edges which benefit them and/or those most closely associated with them." Rather than taking a shareholder's position in isolation, an outside investor should look at the interests involved, and understand their position in relation to those interests. Simple - yes, but a relatively uncommon view in financial markets.
4. The concept and explanation of the "market bail-out" - I.e. an insider takes advantage of elevated market prices in excess of what the corporation is worth in the private market. Whitman explains how the outsider will typically go about taking advantage of this discrepancy through issuance of equity, or merger transaction etc.
As for the imperfections:
1. Repeated misrepresentations of Graham and Dodd. In Philosophy & the study of logical fallacies, I believe they call these red herring arguments.
2. Overly complicated and verbose writing (the academic approach).
Notwithstanding these fairly minor blemishes, I give the book four stars. Practical and insightful guidance from a knowledgable investor, and a different way to view the investment landscape.
JS
.......
Still worth the read in 2019
8/10
For those that have read Security Analysis, I imagine you would gain a similar level of appreciation reading Whitman's work. Both books have large portions delving into accounting or regulatory conventions that are no longer applicable.
However as it was reading Graham and Dodd, reading how Whitman thinks about various investment scenarios and his underlying investing principles was enjoyable in its own right and can still inform a value oriented process today.
as
October 18, 2012
A masterpiece and opened a whole new way for value investing. One of the authors, Martin Whitman recently retired from his Third Avenue fund after working as portfolio manager for more than 20 years. His result is definitely impressive, his mutual fund with no leverage achieved annualized return of 11.88% vs 9.26% for S&P 500 from 1990 to end of Feb 2012. His main investment philosophy consists of investing like a control investor instead of passive investor, performing in-depth bottom up research instead of forecasting near term market level, and focusing on balance sheet NAV growth instead of quarterly earnings. The core of the approach is identifying financially strong enterprise with honest and competent management who can generate long term >10% enterprise NAV growth rate, acquire the stock when the price has more than 25% discount to NAV and hold it until the price approaches fair value. There are many more wisdoms in the book and you should definitely also read his "letter from Chairman" from Third Avenue fund quarterly report for the past to years.
November 21, 2011
A dry but generally on-base defense of value investing. The 4 tenets say it all!
1. Strong financial position
2. Reasonably honest management
3. Reasonably transparent disclosure
4. Price below reasonably estimate of fair value
Nothing new or earth-shattering but a sensible approach to investing, complete with case studies, that would do a lot of people a lot of good if they could follow it.
1. Strong financial position
2. Reasonably honest management
3. Reasonably transparent disclosure
4. Price below reasonably estimate of fair value
Nothing new or earth-shattering but a sensible approach to investing, complete with case studies, that would do a lot of people a lot of good if they could follow it.
July 19, 2016
A good book for someone who already has a value investing style or is interested in fundamental analysis. Subtle analysis of what constitutes appropriate investments for various types of investors, EPS versus book value, insider vs. outsider conflict of interest, etc.
July 12, 2014
Great book...will need to go through it again to understand all of it, though, because I'm new to a lot of the accounting stuff. The investing & corporate finance part was extraordinarily accessible.
February 11, 2017
Good. Lots of practical info knowledge but can be a bit dry.
August 10, 2021
Boring, barely readable book. The general approach of the authors seems sound, if somewhat vague, and there are some interesting parts, but the book is incredibly poorly written. Also, the title is a bit misleading, this is not just a book about investment strategy, large parts are general thoughts on the markets, corporate governance and accounting, most of them written in the literary form known as "tedious rambling".
If you’re looking for some intelligible advice on investment strategy the only part really worth reading is "Tools of Securities Analysis". The authors argue that investors focus too much on earnings, which are short-term and volatile, and that for long-term it is better to pay more attention to strong balance sheets. They spend some time criticizing Graham and Dodd approach, on dividends and other topics. They also point that investors should gain better understanding of behavior of corporate accountants and insiders.
The book jumps from vague ramblings to lengthy, detailed case studies, and often you don’t have any idea where exactly is it going. The authors are very bad at sticking to important points and presenting big picture view. While there are some interesting points, you don’t really read a 500-page book to find just a few interesting points. I’m really surprised at high ratings and popularity of this drudgery.
If you’re looking for some intelligible advice on investment strategy the only part really worth reading is "Tools of Securities Analysis". The authors argue that investors focus too much on earnings, which are short-term and volatile, and that for long-term it is better to pay more attention to strong balance sheets. They spend some time criticizing Graham and Dodd approach, on dividends and other topics. They also point that investors should gain better understanding of behavior of corporate accountants and insiders.
The book jumps from vague ramblings to lengthy, detailed case studies, and often you don’t have any idea where exactly is it going. The authors are very bad at sticking to important points and presenting big picture view. While there are some interesting points, you don’t really read a 500-page book to find just a few interesting points. I’m really surprised at high ratings and popularity of this drudgery.
July 23, 2025
I know this is an investing classic. That's why I read it. But I didn't get much out of this book. Dry and hard to maintain my attention. If you want to study value investing, there are better choices.
October 30, 2018
Respect the author and his intentions but not an easily flowing book.
February 15, 2020
Not my favourite even if there were interesting ideas. Just difficult to be listened too and too much talking against efficient market theory.
Read
June 9, 2021Really a difficult style to digest. Die-hard classics loved the substance.
Read
August 30, 2015Marty's a smart guy, maybe a little too smart for his own good.
Valid criticisms of GAAP and an interesting reflection that Graham & Dodd last published Security Analysis before the "disclosure revolution" as Marty calls it... He's totally right about that. Even reading about how difficult is was to get information back then (pay $10 to get a paper annual report, are you serious?!?), and then that apparently was a lot better than Graham & Dodd days is an interesting point - I'm not 100% sure of its full implications just yet, but know that reading as much and learning as much as humanly possible about as many companies that you can understand is probably still a good idea, and much easier to do than before (and I bet not many people do it, even though now they can!).
Marty doesn't get intrinsic value too much... He keeps wanting companies to do things so that their stock prices will go up, rather than focusing on the company increasing per share intrinsic value and letting stock prices take care of themselves.
He's a good investor, not a great investor. He's a very smart guy. Difficult to read though, and he doesn't think like Buffett or Feynman - his thoughts are not very simple sometimes and often a bit cloudy (he says dividends play five roles for a company, and for the life of me I cannot remember his five roles he thinks it plays haha)
Valid criticisms of GAAP and an interesting reflection that Graham & Dodd last published Security Analysis before the "disclosure revolution" as Marty calls it... He's totally right about that. Even reading about how difficult is was to get information back then (pay $10 to get a paper annual report, are you serious?!?), and then that apparently was a lot better than Graham & Dodd days is an interesting point - I'm not 100% sure of its full implications just yet, but know that reading as much and learning as much as humanly possible about as many companies that you can understand is probably still a good idea, and much easier to do than before (and I bet not many people do it, even though now they can!).
Marty doesn't get intrinsic value too much... He keeps wanting companies to do things so that their stock prices will go up, rather than focusing on the company increasing per share intrinsic value and letting stock prices take care of themselves.
He's a good investor, not a great investor. He's a very smart guy. Difficult to read though, and he doesn't think like Buffett or Feynman - his thoughts are not very simple sometimes and often a bit cloudy (he says dividends play five roles for a company, and for the life of me I cannot remember his five roles he thinks it plays haha)
January 26, 2015
I heard about Martin Whitman in my previous readings on Value Investing. This video on wealthtrack here and others triggered my curiosity to learn more. Indeed the principles of value investing appear clearly here. The emphasis is put on long term holding, the power of compounded interests, healthy balance sheets, management's integrity and a focus on the notes section of the financial statements. Just a couple of drawbacks though. First, as other reviews have said before me, the writing style is indeed quite dry making this a challenging read at times. Also probably a bit too many acronyms (OPM, SOTT, etc) for concepts that other authors such as Howard Marks or Charles D. Ellis have managed to explain in simpler language. Anyway this still made me want to learn more about his achievements and his relationship with the team at Brookfields Asset Management.
February 3, 2016
This is truly an investment classic. Though it was published in 1979, it sounds so meaningful even today. Very practical approach to understanding the investment climate and challenges. Must read!
Displaying 1 - 16 of 16 reviews