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Strategies & Market Trends : Value Investing

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To: cfimx who wrote (5501)	12/20/1998 8:39:00 PM
From: James Clarke	Read Replies (1) of 78666

All this talk about "repudiating Graham" is a little much. Warren Buffett has not "repudiated" Graham, as anybody who saw his discussion of the man on the recent PBS program would know. What did Graham teach Buffett, and me? 1) Look at an investment as a business which you can value. If you can't value it, don't look at it. 2) Recognize the difference between investment and speculation. 3) Diversify 4) The key is the concept of margin of safety. Graham went onto provide a specific way he used to come to a conservative valuation of a business. Buffett came up with another. Clearly Buffett disagrees with Graham on number three, but overall, I see Buffett investing AS PRACTICED BY BUFFETT as being an overlay of Graham, not a repudiation by any means. It is so much more important to recognize the first and fourth concept - being able to value the business and to invest at a margin of safety. Those are things Graham did, Buffett does, and investors like Sanborn certainly do. But as obvious as these concepts seem, investors who practice them with conviction are still the small minority of both amateurs and professionals in my opinion. Jim

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