From the Bookshelf
A combination of long-term investing and shorter-term trading strategies are advocated in “Value Returns: Wise Investing for the Next Decade and Beyond” (Linx, 2011). Authors Randy Beeman and James Schneider believe that the U.S. is in the midst of a secular bear market. This, they argue, requires combining traditional value investing with a more proactive trading strategy.
Their value strategy is to buy well-run, profitable companies that are trading at low price-earnings or price-to-book valuations and have a commitment to paying dividends. These characteristics should enable a portfolio of “core” stock holdings to be created.
The authors further advise trading non-core stocks. These companies may be in cyclical sectors or foreign markets or have small market capitalizations. The stocks should be bought when valuations are low, and sold when valuations reach either full or premium levels.
The fundamental approach advocated for picking stocks is sound, as are the rules for selling. Though the authors take a pessimistic view, the concept of buying good companies when they are cheap and selling them when they are dear is one that applies to all market cycles.
“What Would Ben Graham Do Now? A New Value Investing Playbook for a Global Age” (FT Press, 2011) sets out to give investors an updated strategy based on legendary value investor Benjamin Graham’s philosophy. Author Jeffrey Towson applies Graham’s strategies to international investing.
Towson spent much of the last decade working for Saudi Prince Al-Waleed bin Talal, a billionaire global investor. He uses this experience and his familiarity with Graham’s writings as the basis for his book.
We have no problems with the premise of the book. Towson consistently reminds readers about the importance of factoring in a margin of safety into all investment decisions. He further states that Graham was less concerned with global macro trends than he is; Graham preferred to focus on an individual company’s fundamentals and valuation.
Towson’s focus on global private equity makes the book an interesting read for those who want to learn more about the topic; however, investors seeking guidance on how to pick publicly traded foreign stocks will be disappointed.