I’ve just finished listening to Fundamental Analysis, Value Investing, and Growth Investing by Roger Lowenstein and Janet Lowe.
Lowe has written books on Graham, Munger, Buffet, and a host of successful investors over the years.
Lowenstein is a prolific writer and financial journalist who knows a thing or two about financial markets.
He also writes a Substack.
Two halves of the same book
I really like how the book is split into two halves.
The first half narrates how the inventor of value investing – Benjamin Graham – came to his approach, what drove his ambition to seek wealth, and what Walter Schloss described as ‘a straightforward man with a quick, brilliant mind’
Impressively there is the revelation that Graham advocated making money from stocks the way that speaks to you, even if that means using a method that is not value investing:
Do those things as an analyst that you know you can do well, and only those things. If you can really beat the market, by charts, by astrology or by some rare and valuable gift of your own then that’s the row you should hoeBenjamin Graham
Naturally, I’m drawn to the gardening reference Graham makes here.
Lowenstein and Lowe take us on a superb journey with insights about the father of value investing I’ve not come across before.
The second half: fundamental Analysis, value investing, and growth investing
The second half will appeal to the student of the value approach; it’s awash with lessons on how to conduct balance sheet analysis.
You will benefit from a pen and paper.
The authors also compare the differences between the value approach and growth investing, drawing from the experiences of well-regarded growth investors.
That’s the only growth rate that rally counts: earningsPeter Lynch
The comparison with growth investing is extremely useful because it’s an approach that is just as prevalent in financial markets today as the value approach is.
Net current assets, net cash, intangible assets, growth rates in earnings, ROIC, revenue, and book values – it’s all in there. Lowenstein and Lowe pack in enough detail to get you well up to speed on the value and growth approaches.
(An investor) should think about the world in which he lives rather than to analyse numbers from a balance sheet or income statementT Rowe Price
Find an investing style that works for you, but value wins out.
The main thread throughout the book is the concept of a margin of safety and mercifully the authors provide numerous examples of how to calculate it and why it’s such a central tenet of the value approach.
This and the fact that Lowenstein and Lowe cover a vast amount of ground from a value and growth investing perspective makes it worth a listen – it’s currently only available as a CD or on Audible.
In the end, the authors have a clear preference for the value approach, and one of their gifts is a clear description of what a value investing model looks like:
The value investing style produces a low cost, low maintenance investment portfolio. But investors should not think of it as a cookbook approach to buying and selling stocks. A value investor typically looks at numbers and plays with a few formulas but no mysterious maths tricks are necessary. As taught by Benjamin Graham, value investing is more of a philosophy than a technique. It is an approach, an attitude, a style.Roger Lowenstein and Janet Lowe