When Donald Yacktman, Shelby Davis, Elizabeth Bramwell, L. Roy Papp, and Robert Stovall talk, investors the world over listen. These experts collectively not only manage billions of dollars, but have also posted some of the best performance results of money managers on Wall Street today.
Now noted investment analyst and author Kirk Kazanjian takes readers behind-the-scenes with these luminaries and reveals their most successful investment secrets. As an added bonus, each 'guru' offers his or her top 10 growth stock picks for the next millennium.
Complete with candid, personal biographies that both paint an informative portrait of these money managers and offer an insight into what makes them tick, Kazanjian provides 12 easy-to-follow rules that get right to the heart of knowing how to spot tomorrow's most promising investment's today:
1) Forget about the Market
2) Invest Like a Tortoise, Profit Like a Hare
3) Buy the Best When It's on Sale
4) Take a Good Look Around You
5) Get to Know Your Partners
6) Avoid Unnecessary Risk
7) Travel Around the Globe, But Stay at Home
8) Be Willing to Change
9) Never Underestimate the Power of Technology
10) Read the Fine Print
11) Don't Spread Yourself Too Thin
12) Know When to Say Goodbye
|Publisher:||Penguin Publishing Group|
|Sold by:||Penguin Group|
|File size:||716 KB|
|Age Range:||3 Months|
About the Author
Don Phillips is President and Chief Executive Office of Morningstar, Inc., the nation's leading publisher of mutual fund reaearch. He is often quoted in such publications as the Wall Street Journal, the New York Times, Forbes, and Money.
Read an Excerpt
I started investing when I was 14 years old. That's when my father bought me shares in the Templeton Growth Fund, explained how the fund worked, and showed me how to look up its price in the daily newspaper. While that gift didn't cause me to stop reading Boy's Life in favor of The Wall Street Journal, it did make a lasting impression.
By giving me this fund, my father not only introduced me to Sir John Templeton, one of the twentieth century's greatest investors, but he also established himself as an important role model. He taught me that investing was a part of his life and could be a part of mine, too.
In time, I came to see investing as an activity for all responsible adults. By setting aside today's gratification to ensure tomorrow's well-being, we demonstrate our maturity. These are hard lessons to learn. The temptation to spend today is always great. I'm constantly reminded of this lesson as I watch my sons grow up. Seeing the world through their eyes reminds me of how many messages we receive on how to spend and consume. Commercials, fast-food promotions, the toys of friends--all send countless messages about the instant gratification of consumption.
Apart from me, I often wonder where my sons will get lessons on the discipline of saving and investing.
Too many of us grow up without investment role models. The subject rarely comes up even in schools. We spend a lifetime fine-tuning our shopping skills, but we don't work nearly as hard at our investment skills. The same person who will drive across town to save 50 cents on a six-pack of cola will throw thousands of dollars at a stock or a mutual fund on the basis of a got tip or an unsubstantiated rumor. We are, despite much well-intended educational efforts, a nation of investment illiterates.
We need help. We need role models.
That's where Kirk Kazanjian's Growing Rich with Growth Stocks comes in. Kirk has gone right to the best investment role models out there: top, time-tested managers such as Don Yacktman, Liz Bramwell, and Shelby Davis. These experts share their secrets with Kirk, who in turn has translated their collective wisdom into a sound agenda for any investor looking to learn the ropes. In a field still too dominated by get-rich-quick schemes, Kirk has sought and found a different breed of investor, one who accumulates money through diligent research and patience. The advice of these managers isn't flashy, but it works.
Investing is a simple activity at its core. Buy low and sell high isn't a tough lesson to learn. It's just phenomenally difficult to put into practice. If you're going it alone, it can be maddening. With the counsel of these great investors at your side, however, the road will not only be smoother, it should also be much more profitable.
My best to you on your journey. May you truly grow rich with growth stocks.
The roots of growth stock investing are very rich indeed. Among the sport's earliest players was T. Rowe Price. This venerable Wall Street legend preached the merits of buying quality companies with accelerating earnings, even if it meant paying a slight premium for the privilege. Price was among the most influential portfolio managers of the early twentieth century. He went on to build a mutual fund empire that has grown exceedingly faster than most of the stocks he ever owned. While many of his peers agreed with his philosophy, few followed it as religiously as he did. As a result, their performance suffered, while his earned widespread praise.
Growth stock investing has come a long way since Price rose to prominence. Among the more modern-day practitioners of this art are Warren Buffet, arguably the most successful and admired living investor, and former Fidelity Magellan manager-turned-author Peter Lynch. It is clearly the investment discipline with the widest following on the Street today, largely for one reason: It works.
Unfortunately, most who proclaim to follow the tenets of growth stock investing never reap its rewards, for finding companies with lasting staying power is no easy task. They come in every size and industry. But failing to separate the genuine growers from the one-hit wonders leads many investors astray. That's why so many professional money managers fail to even keep up with the computer-run stock market indexes. Surely their performance would be greatly enhanced if only they knew the 12 rules for successful growth stock investing, as revealed in this book.
These rules are based on lessons I have learned through interviewing and observing five of the top growth stock managers watching over other people's money today: Elizabeth R. Bramwell, Shelby Davis, L. Roy Papp, Robert H. Stovall, and Donald Yacktman. These luminaries have more than 170 years of combined investing experience and have amassed some of the most impressive performance records on public display. Investment professionals of this caliber are precious indeed, for they are few and far between.
While each investor has a slightly different way of choosing companies for his or her portfolio, they all share a dozen key traits. In this book, you'll discover their secrets. If you take the time to learn and master each rule, something that is clearly within your reach, you can begin to share in the tremendous financial rewards bestowed upon those smart enough to know a promising investment when they see one.
Before we begin this journey into successful stock picking, let me briefly introduce you to the five minds behind the concepts. (You will get to know them in greater depth as you read their "One-on-One" profiles throughout the book.
Donald Yacktman is president and chief investment officer of Yacktman Asset Management in Chicago. Before starting his own firm in 1992, he managed the Selected American Shares fund for almost a decade. Yacktman likes to buy growing, and often boring, companies when they're beaten down and selling below their estimated intrinsic value. In other words, Yacktman is a growth investor who uses value techniques for choosing stocks. He favors big companies and believes in holding a concentrated portfolio.
Robert H. Stovall first began observing the Wall Street scene as a 14-year-old messenger boy for the brokerage firm Reynolds and Company. After taking time out for military duty in Italy during World War II, he earned two business degrees and has been involved in money management ever since. He was one of the first investment analysts to earn the prestigious CFA designation and is a popular panelist on the PBS program Wall $treet Week with Louis Rukeyser. Most of Stovall's clients are retired and therefore quite conservative, which means he tends to be more risk-averse than some of the others featured in this book. He concentrates on locating attractive growth stocks in undervalued sectors while hunting for companies expected to benefit from his broad-based observations of leading trends around the world.
Shelby Davis comes from an impressive bloodline of investment geniuses. His father was a well-known insurance stock analyst whose personal equity portfolio grew from $100,000 to $50 million in less than eight years. Davis started the New York Venture Fund in 1969. It has easily eclipsed the Standard & Poor's 500 index during its profitable history. The Davis investment philosophy calls for identifying long-term trends early while focusing on high-quality companies with good growth prospects that sell for reasonable prices. His emphasis is on research and getting to know management. Davis doesn't believe in market timing and strives to be a long-term owner of every stock he buys.
L. Roy Papp is like the jolly old grandfather every kid would love to have. This folksy investment manager from Arizona has more than four decades of experience under his belt, including a stint as the American director of and ambassador to the Asian Development Bank in Manila under President Gerald Ford. Papp graduated from the Wharton School and worked his way up through the ranks at the growth-investment shop Stein Roe & Farnham in Chicago. He started his own firm in the early 1980s and now has some $1 billion under management. Papp's pioneering investment philosophy calls for buying American companies with a decidedly international theme, to safely capture some of the incredible profits enjoyed by doing business overseas. To make Papp's buy list, a company must get at least 35 percent of its sales or operating earnings abroad, show increased earnings and dividends in each of the last ten years, have a high return on shareholder equity, and sport only a small amount of debt.
Elizabeth R. Bramwell is among the most successful women ever to work on Wall Street. Following her early days as an analyst, she teamed up with her business school classmate, Mario Gabelli, to start the Gabelli Growth Fund in 1987. During her tenure as manager, she consistently bested the performance of her boss, which created a lot of tension between them. She ultimately quit and went out on her own. Bramwell follows smaller stocks than Yacktman and Davis, and holds a more diversified portfolio. Her investment style can best be described as "eclectic." She is both a top-down and a bottoms-up manager, who begins by analyzing broad secular trends before hunting for individual companies that stand to benefit. She attends plenty of analyst meetings and prefers well-financed businesses with growing market shares, ready access to capital, and good management.
The "One-on-One" profiles, which are interspersed between the chapters, contain complete biographies of each of these five living investment legends. One thing you'll learn from their personal stories is that past life experiences have had a definite impact on the way they choose stocks. You'll also discover each investor's ten favorite growth stocks for the twenty-first century. These are companies poised to make you rich for decades to come.
I would encourage you to not simply skim through the list of rules, which are fully summarized in "The Bottom Line" briefings at the end of each chapter. Rather, read each one carefully to gain a greater understanding of the rationale behind these principles. Otherwise you will be left flying an airplane without knowing how each of the buttons on the cockpit's control panel really work. If you digest the underlying reasons behind every rule completely, by the time you finish reading Growing Rich with Growth Stocks, I'm convinced you will have the tools you need to greatly improve your investment results. You will never buy stocks the same way again. Instead, you will enter the game with more discipline and the knowledge you must have to stay ahead of the crowd on Wall Street for the rest of your investment life.
Table of Contents
|Rule 1||Forget About the Market||1|
|Rule 2||Invest Like a Tortoise, Profit Like a Hare||13|
|One-on-One: Donald Yacktman||19|
|Rule 3||Buy the Best at Bargain Prices||49|
|Rule 4||Take a Good Look Around You||63|
|One-on-One: Robert H. Stovall||73|
|Rule 5||Get to Know Your Partners||99|
|Rule 6||Avoid Unnecessary Risk||111|
|One-on-One: Shelby Davis||129|
|Rule 7||Travel Around the Globe, but Stay at Home||151|
|Rule 8||Be Willing to Change||163|
|Rule 9||Never Underestimate the Power of Technology||171|
|One-on-One: L. Roy Papp||179|
|Rule 10||Read the Fine Print||195|
|Rule 11||Don't Spread Yourself Too Thin||207|
|Rule 12||Know When to Say Good-bye||211|
|One-on-One: Elizabeth R. Bramwell||219|