Wednesday, February 29, 2012

A class on Value Investing

Hi Geoff,

Assuming someone had the temperament, interest and work ethic to be a good investor. What would you prescribe as a curriculum?

Which books, articles, shareholder letters, blogs, websites, etc. If you were going to have an extensive class on value investing, what would the materials list look like?

Thanks,
Ryan

Here is what I would make required reading:

· Warren Buffett’s Letter to Shareholders (1977-Present)

· Warren Buffett’s Letter to Partners (1959-1969)

· The Snowball: Warren Buffett and the Business of Life

· Buffett: The Making of An American Capitalist

· Poor Charlie’s Almanack

· Common Stocks and Uncommon Profits (by Phil Fisher)

· The Interpretation of Financial Statements (by Ben Graham)

· The Intelligent Investor (1949 Edition)

· Security Analysis (1940 Edition)

· Benjamin Graham on Investing

· Benjamin Graham: The Memoirs of the Dean of Wall Street

· One Up on Wall Street (by Peter Lynch)

· Beating the Street (by Peter Lynch)

· You Can Be a Stock Market Genius (by Joel Greenblatt)

· The Little Book That Beats the Market (by Joel Greenblatt)

· There’s Always Something to Do (about Peter Cundill)

· The Money Masters

· Money Masters of Our Time

· Hidden Champions of the Twenty-First Century

· Jim Collins Books (Built to Last, Good to Great, How the Mighty Fall, and Great by Choice)

· Distant Force (about Henry Singleton)

· Kuhn’s The Structure of Scientific Revolutions and The Essential Tension

Part of the class would require reading some material about extreme stock market conditions like:

· The Big Short

· Too Big to Fail

· This Time is Different

· When Genius Failed

· The Panic of 1907

This part of the class would revolve around contemporary sources. Students would read newspaper articles from the various crashes. They’d also read newspapers around the time of the various market bottoms. Historical case studies should be based on sources that were present and available to investors, CEOs, etc., at the time. So, if you’re studying an investment Ben Graham made in 1942 – you should be using The New York Times archives to find articles printed in 1942 and you should be getting your data from a Moody’s Manual from 1942.

This is critical.

And many people have never done it. Many investors have never gone back through old Moody’s Manuals, newspaper articles, etc. If you think you know enough about 1929 and yet you’ve never read something written in 1929 – you’re idea of knowing is too intellectual and external. Knowing is understanding what the paper looked like every morning to folks who were as blind to the future as you are now. You have to internalize what it feels like to be in the middle of all that.

***

[Assuming that Geoff has done all this (impressive already to me), I wonder how successful he actually is at investing? Here's a hint, he moved to Texas and is now working full-time for gurufocus. (So he still "works" for a living.)

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