Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era -- Ignore unavailable to you. Want to Upgrade?

To: David C. Burns who wrote (1468)	3/17/1999 9:29:00 PM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

"Any comment on Nicholson's contribution to value investing?" I am not familiar with Nicholson. But, I have never believed that Graham was the first investor to realize that if the goal is to buy low and sell high, the place to begin is to buy low. And, certainly, 19th century investors were well aware of Mr. Market's violent moodswings, and the unavoidable implication that the price is not always right. Here's what I wrote a few years ago about Graham's role: "Benjamin Graham and David Dodd's "Security Analysis" did for investing what Freud's "Psychoanalysis of Dreams" did for psychology and Newton's "Principia Mathematica" did for physics. Each of these monumental works addressed a field theretofore largely a collection of disconnected observations in support of a few educated hunches. Through brilliant insight, exhaustive observation, and thoroughgoing logical rigor, each work provided a comprehensive system of theory and practice which have become the standard against which all subsequent work in their respective disciplines are measured." In other words, Newton was not the first to "discover" physics, Freud did not discover psychology, and, while we are at it, Marx did not discover class struggle. Likewise, Graham probably did not first discover that there are identifiable discrepancies between the short term prices of securities and their long term value that could be profitably exploited by the astute investor. But, all of them, borrowing on the insights of the past, created a systematic discipline which subsequent researchers built upon. As I wrote recently, Graham, imo only half in jest, late in life disclaimed the attribution "Value Investor". I feel he would be as skeptical as I am of the practical value to the average investor of the current orthodoxy on the subject. Here's a link to an article that near its end makes brief reference to Micholson's contribution to Value Investing. Unfortunately, it gives no specifics, other than that his work was based upon research on the post World War II period. As you know, Graham and Dodd's "Security Analysis" was first published in 1934. business.phillynews.com porc --''''>