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The Little Book of Value Investing

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The Little Book of Value Investing

Wiley,

15 min read
10 take-aways
Audio & text

What's inside?

Value investing is an indispensable method, so this may be an indispensable, though compact, book.

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Editorial Rating

9

Qualities

  • Applicable

Recommendation

This short book is surely among the most concise, informative investment guides ever written. Christopher H. Browne manages to make stock market investing as simple and straightforward as shopping for groceries. He sketches quickly, but in adequate detail, the main principles of value investing, offers guidance on how to use such basic information as P/E ratios, points the way to free online stock-screening services and, yet, makes no big promises about market success. His message is that value investors who do their homework patiently and thoroughly may expect good returns eventually. Instead of aggressive trading, he emphasizes the virtue of not taking action. getAbstract recommends this succinct tutorial to every investor.

Summary

The Stock Sales

Many people buy stocks at exactly the wrong time - when they are expensive. The stock market has a herd instinct, and both individual and professional investors let themselves get swept along by the crowd. Value investors take a more sensible approach and buy stocks when they are bargains. Stocks don't actually go on sale the way steak does, of course, but market moves send prices up and down. Buying when prices are low has been a successful investment strategy for many, if not all, of the most legendary value investors, such as Warren Buffett, Bill Ruane and Bill Miller. The details of their strategies differ, but they all seek value.

What does value investing mean? Essentially, it means buying a stock when the price is marked down. But value investors do not just look for cheap stocks; they pursue stocks whose real value is higher than their prices.

Value and Safety

Value investors ask two bedrock questions: What is a stock's true or intrinsic value? And, does the stock offer investors a margin of safety? In 1934, Benjamin Graham literally wrote the book on value investing. His principles have guided value investors ever since. Graham...

About the Author

Christopher H. Browne is a managing director of an investments firm and a member of its management committee. He established the Browne Center for International Politics and the Browne Distinguished Professorships at the University of Pennsylvania.

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