Andrew Allentuck

Friday, November 17, 2000

Investing the Billionaire's Way: The Genius of Patience
By J. Richard Charlton, Ned Goodman
Stoddart, 215 pages

Author Charlton, an exponent of buy and hold investing, has helped to develop several families of mutual funds that operate on value principles, seeking out firms that are undervalued and holding them for long periods. Investing the Billionaire's Way explains why value investing should work over the long term. Mr. Charlton's style is pleasant, chatty, fact-filled and informed. For an investor with little experience in mutual funds or stocks, this is a fine introduction.

On seeking to buy low, Mr. Charlton writes, "There are no billionaires in the Forbes 400 Richest People listings who are market timers." Buy and hold investing, the opposite of timing, nevertheless should do well since the long term investor pays no capital gains taxes until a final return at death and maybe not even then if the estate goes to a spouse, minimizes brokerage fees, and may even save on headaches.

There are other ways to invest than in seeking out relatively low priced but solid stocks and holding them for decades. Growth style stocks have been outperforming value stocks and, indeed, have set historical records of outperformance in 1999. The subtitle of this book is right, however, for value investors do minimize volatility in their portfolios. As long as they can wait for their stocks to flower, they will do very well. But to wait until a portfolio of slow moving stocks starts to sizzle does take patience.