value investing

Review: Value investing, by Janet Lowe

January 21st, 2013

This book is a little gem for anybody who has difficulties in understanding the investment philosophy of Benjamin Graham.

Lowe, who has written extensively on Graham, explains many of the investment terms and strategies given by Graham in his writings and relates them to current and up to date business situations. She explains to the reader what value investment is and its connection to both company growth and intrinsic value.

A particularly good chapter is the one on how to identify growth from the income statements because, as readers are well aware, Warren Buffett’s particular gift has been in finding companies selling at Graham prices but with great growth potential.

This book has been criticised as being too simple for anyone with a sound knowledge of investment principles. We agree; it is for those people who do not yet have an understanding of Graham and Buffett investment techniques. For those in this niche, it is a good start.

Another criticism is that the author wrongly suggests that Buffett supports diversification in stocks. Technically, this is true. Warren has on several occasions suggested that investors concentrate on just a few stocks. This does not however mean that Buffett is against diversification per se. If you look at the investments of Berkshire Hathaway, you will find, although only a few stocks, a wide diversification across industries.

The book is easy to understand for even the most basic of investors, and is well researched. The index, like many these days, leaves a lot to be desired. HIGHLY RECOMMENDED FOR BEGINNING INVESTORS.

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Value Investing

Posted by Julian Livy on January 21st, 2013 | Posted in Book reviews |