Friday, September 22, 2000
The Rediscovered Benjamin Graham: Selected Writings
Ben Graham was to the analysis of stocks what Sir Isaac Newton was to physics and mathematics. Graham's Security Analysis, published in 1934, turned the business of examining the financial prospects of public companies from a hit and miss affair into something resembling a science. A classical scholar by training, he virtually invented the field of security analysis.
In this new book, Janet Lowe, author of such bestsellers as Warren Buffet Speaks and Ben Graham on Value Investing, reprints articles and speeches by Mr. Graham. A quarter century after his death, his examinations of whether corporations are milking their owners, whether wealthy corporations should return their investors' cash, and speculative excesses in the stock market are as relevant as when many were written more than half a century ago.
Ms. Lowe has repackaged one of history's greatest money managers in a brilliant compilation. After the pleasure of reading the Rediscovered Benjamin Graham, an investor will see the market more clearly and can probably make more money.
Consider this passage from Graham's "Is American Business Worth More Dead Than Alive?" from the June 1, 1932 issue of Forbes: "Businesses have come to be valued on Wall Street on an entirely different basis from that applied to private enterprise. In good times, the prices paid on the stock exchange were fantastically high, judged by ordinary business standards; and now, by the law of compensation, the assets of these same companies are suffering an equally fantastic undervaluation."
Should one buy in the midst of a market in the midst of a profound and worsening crisis, as Wall Street was when those words were written? Advised Graham, quoting the Roman poet Ovid, "You will go safest in the middle course." In short, avoid extremes and find enduring value in sensibly priced stocks.