jbe, re: books
it sounds like the book you mentioned is a must-read:
(Kenneth S. Hackel & Joshua Livnat: Cashflow and Security Analysis, 2nd edition, 1996)
I'll pick it up from Amazon.com...
If you haven't read it yet, you really should pick up "The Warren Buffett Way" by Robert G. Hagstrom, Jr. IMHO, it's impossible to exaggerate the importance of this book. It provides a lucid, organized and easily understandable guide into Warren Buffett's common-sense investing style. It changed my life. After that, I recommend Roger Lowenstein's (sp.?) Buffett biography, and every single one of Buffett's letters to shareholder's, which are now available for free on his website:
berkshirehathaway.com
I'm currently reading "Common Stocks and Uncommon Profits" by Philip A. Fisher. It focuses on the advantages of investing in well-managed growth companies for the long term. Next up will be "The Theory of Investment Value" by John Burr Williams, who is apparently the father of the dividend discount model - which is the basis for the discounting technique I described in such agonizing detail earlier.
Some other book reviews:
"The Intelligent Investor" by Ben Graham. Fantastically boring, but important. It along with "Security Analysis" kind of introduced to the world a concept of "value". He espoused a technique where you find the value of the company basically on it's balance sheet, and buy it well below that for a "margin of safety". Good point, but he was conservative to a fault. He refused to allow that future earnings were worth paying for. Buffett is said to have combined Graham's "margin of safety" with Fisher's growth theory and Burr's valuation technique. To this mixture he threw in his own concept of "owner earnings" (free cash flow), and the result has been a 30 year compound annual return of over 23%. KO, Gillette and GEICO are perfect examples of this in action.
Peter Lynch's books "One Up on Wall Street" and "Beating The Street". I like his common sense approach, but his thinking is more complicated and harder to practice. I tend to think that you kind of have to be Peter Lynch to succeed at what Peter Lynch does. And have a lot of time on your hands. Still, very good reading.
Anyone else have any books to recommend?
Andrew |
