How To Think Like Benjamin Graham and Invest Like Warren Buffett [NOOK Book]

How To Think Like Benjamin Graham and Invest Like Warren Buffett

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Overview

A Commonsense Investing Approach that Combines 21st Century Technology with the Market-Proven Strategies of Benjamin Graham and Warren Buffett





Selected by JP Morgan as a Top 10 "Must Read"





"Earnings and cash flows are... the critical link in the investment chain, and Larry Cunningham's book forges it with heat, power, and persuasiveness."



­­John Bogle, Founder, The Vanguard Group





"A much-needed work on a unique style of investing, this book puts the ABCs of common sense valuation back into the business of investing. This is the place to look for insight and guidance in the age of volatile markets and colliding ideas."



­­Alan C. Greenberg



Chairman, Bear Stearns





"Anyone desiring to be a successful investor should read this excellent book presenting the important investing principles of Graham, Buffett, Fisher, and others in a most insightful and understandable manner."



­­David J. Gottesman



Chairman, First Manhattan





"Remarkably timely. For stock players who realize they played the greatest fool in the Internet stock game, Cunningham offers a tool for rehabilitation: a guide to thoughtful investing. For earnest investors, he shows how to live profitably with the moodiness of Mr. Market."



­­David Henry



Columnist, USA Today





"While the stock market does not always behave rationally, Larry Cunningham's well-articulated and insightful views as to value investing are a refreshing reminder that, just as night follows day, a return to the principles at the core of Cunningham's common sense approach to investing is inevitable."



­­Samuel J. Heyman



Chairman of the Board and CEO, GAF Corporation





"Lawrence Cunningham explains, then debunks, most of today's acronyms, buzz words, and pop investing concepts. He gets down to the fundamentals that investors must know about companies in order to choose reliable winners in the stock market."



­­Janet Lowe



Author, Benjamin Graham on Value Investing and Warren Buffett Speaks







"Following the herd may seem rational and intelligent­­until it stampedes straight off the cliff."



­­From Chapter 1



Lawrence Cunningham possesses one of today's clearest, most distinct voices on the inherent irrationality of investors and the stock market. Renowned for his no-nonsense style and straightforward approach, he is also renowned for telling independent investors­­better than any other market observer­­how and where to find uncommon values in virtually any market environment.



In How to Think Like Benjamin Graham and Invest Like Warren Buffett, Cunningham returns to the basics­­by returning to the two legends who established, and then refined, those basics. He shatters many of today's common investing myths, replacing them with the facts and tools needed to thoroughly analyze the investment value of any business.



This remarkable book illustrates how forces that are unique to today's market­­including electronic day trading, an overvalued IPO market, and computer-based stock exchanges­­are leading to an increasingly wide gap between price and value. It then convincingly explains how to close that gap, and find underpriced stocks poised to recover their value, by using the business analysis approaches and insights of Benjamin Graham and Warren Buffett.



In a sophisticated but readable style, How to Think Like Benjamin Graham and Invest Like Warren Buffett discusses how to understand and apply the time-proven tenets of value investing:



How to value a business­­with valuation examples from top companies including GE, Microsoft, Amazon.com, and others



How to rate business managers­­a key to finding quality long-term investments



How to know when management is playing with numbers­­and understand the games they play



Unlike any financial book you have ever read, How to Think Like Benjamin Graham and Invest Like Warren Buffett wraps a lifetime of investing wisdom into one compelling, insightful, and highly accessible package. An intelligent guide to accurately analyzing and realistically valuing investment targets, it will tell you what questions to ask, what answers to expect, and how to approach every stock as an experienced, skeptical, and commonsense business analyst.

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Editorial Reviews

BusinessWeek
An intelligent and thoughtful guide.
United Press International
. . . a welcome addition to the bookshelf of anyone who wants to take control of his or her financial life.
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Product Details

  • ISBN-13: 9780071381048
  • Publisher: McGraw-Hill Education
  • Publication date: 1/16/2001
  • Sold by: Barnes & Noble
  • Format: eBook
  • Edition number: 1
  • Pages: 267
  • Sales rank: 489,221
  • File size: 3 MB

Meet the Author

Lawrence A. Cunningham is author of the bestselling The Essays of Warren Buffett: Lessons for Corporate America as well as a number of textbooks and supplements. As director of the Samuel and Ronnie Heyman Center on Corporate Governance at Cardozo Law School, Professor Cunningham is a leading expert in three fields that are essential to successful investing—accounting, finance, and corporate governance. He has been featured in Forbes and Money, as well as on CNN and The News Hour with Jim Lehrer, and is frequently invited to speak to investment groups throughout North America.
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Table of Contents

Part I: A Tale of Two Markets. Chapter 1: Mr. Market's Bipolar Disorder. Chapter 2: Prozac Market. Chapter 3: Chaotic Market. Chapter 4: Amplified Volatility. Chapter 5: Take the Fifth. Part II: Show Me the Money. Chapter 6: Apple Trees and Experience. Chapter 7: Your Circle of Competence. Chapter 8: Recognizing Success. Chapter 9: You Make the Call. Chapter 10: Making (Up) Numbers. Part III: In Managers We Trust. Chapter 11: Going Global. Chapter 12: Rules and Trust. Chapter 13: Directors at Work. Chapter 14: The Fireside CEO. Conclusion: The V Culture.
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Sort by: Showing all of 2 Customer Reviews
  • Anonymous

    Posted March 2, 2001

    Stunning

    Covers a lot of ground very well and briskly. In the first part, it explains how markets work (and how lots of people think they do), the risks and limits of high-risk strategies like day and margin trading and what those mean for other people, asset allocation echniques, and a critical review of new economy rhetoric and what that all means for us. In the second part, key valuation ideas are presented in a way that is easy to understand but that still serious (i.e., really helpful). Topics again range pretty widely, from inflation and interest rates, to the 'circle of competence', to earnings and cash flows, to accounting games. The third part is also broad and tight, with a look at what corproate managers do and can be expected to do, including details of popular debates about corporate governance in recent years. The emphasis in this area is figuring whom to trust with your investment resources. The treatment of GE's Jack Welch is particularly rich (and full of a whole separate set of insights as rich as any of the Welch biographies have given). The book really covers all the ground any investor needs to think about, which is I guess a good reason for the title. My only criticism would be that in the area of investor psychology the book mentions some of the key topics but doesn't really get into them as much as it gets into the other topics. But that is really a quibble. It remains a riveting, wide ranging narrative. Worth a careful read.

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  • Anonymous

    Posted February 3, 2001

    Great Distillation and Updating of Graham and Buffett

    Although the definitive popular book on Benjamin Graham and Warren Buffett remains to be written, this excellent work is certainly the state-of-the-art in this area. For those who do not have the time or inclination to read the writings and speeches of these important investment thinkers, you get the key kernels of wisdom in action-oriented doses here. This is the first book I have read that gives the stock investor who wants to outperform the market averages a sense of what is involved in order to have a chance. The examples of how to apply these methods to companies like General Electric, Coca-Cola, Microsoft, and internet retailers are very helpful. I thought this book was much more valuable in every way than Buffettology. Both Graham and Buffett see buying stock as being the same as buying a whole company. The analytical methods involved are similar to those used by companies thinking about making an acquisition, except there is no need to consider what the joint operating benefits of the companies will be. The strength of this approach to stock investing is that if stock values for a company fall too low another company or group of cash-flow-oriented investors will acquire the whole company. In the long run, stocks should not fall too far below their intrinsic value (a Graham concept) as cash flow generators. The book is organized into three sections. The first looks at whether the stock market is efficient or not. If it is, you cannot beat it. If it is not, you can beat it by investing where it is not efficient. The evidence here summarized estimates that the stock market is at least 20 percent inefficient and becoming more so. I am aware of a number of studies showing other kinds of inefficiency that Professor Cunningham does not cite. My own personal view is that the stock market is not very efficient at all, but is relatively predictable within a band of probability. A particular strength of this section is in creating a summary of many of the arguments for stock market efficiency and inefficiency. Trust me. Unless you really love reading this kind of research (which I happen to), you will be better off reading the summaries here rather than the originals. The second section discusses how to outperform the stock market. The best part of this section is an extremely well done parable about a man who wants to sell his apple tree. He is approached by many different types of potential purchasers, and they offer wildly varying prices. You get the interior logic of how each price is arrived at in a way that allows you to see the fundamental weaknesses and strengths of each approach. Nicely done! The heart of this section emphasizes the familiar Graham and/or Buffett (their philosophies do not coincide, but rather partially overlap) concepts of sticking to what you know well, having a margin of safety, and doing your homework. I particularly liked the detailed description of how to determine where you have a knowledge edge that allows you to potentially have an advantage as a stock investor. The cautions against overestimating what you know are very well done. The third section looks at the role of company management and boards of directors. It debunks a lot of the popular thinking about the importance of good governance. As Warren Buffett often emphasizes in his annual letters to shareholders, you should invest only with people you 'like, trust, and admire.' A CEO with a weakness (particularly a lack of integrity) can quickly tank your investment before you can do anything about it. Certainly, I have been sorry a number of times when I have not followed that rule. I certainly subscribe to it now. Every management will make mistakes. Only highly focused and capable ones will notice that they have and work on rectifying the errors rather than trying to explain why there really is no problem. If you read this book carefully, it will convince you that outperforming the stock market is a pretty hard th

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