Value Investing Made Easy: Benjamin Graham's Classic Investment Strategy Explained for Everyone [Anglais] [Broché]

Some reviewers criticize Lowe, claiming 1) the book is too simple, 2) she simply quotes people like Buffet, Graham and Lynch, and 3) she doesn't explain her calculations enough. I disagree on all counts! You really should take a look at this book; it's an excellent all around introduction.

1. Is the book too simple? No, it's supposed to be simple. Lowe herself explains in the title, and in the preface, that this book is meant to be ``Graham and Dodd made easy''. She did a good job; that's just what the book is. After you read this book, you should think about moving on to Graham and Dodd--but this book is a good start.

2. What's wrong with quoting successful folks like Buffet, Graham and Lynch? Remember, this book is ``Graham and Dodd made easy'', so it's bound to contain lots of references to Graham and Dodd. Naturally, it also contains quotes from Graham's most successful disciple, Warren Buffet. The quotes are well chosen, so Lowe has done us a service. She has distilled the wisdom of the master.

3. Should Lowe make recommendations, like ``use this formula; don't use that one''? I don't think so. The problem with value investing is that no one formula perfectly captures business worth. If there were a simple formula, then everyone would be a millionaire. The fact is that you need to know several different ways of looking at company value. Each way is reasonable. Your personality, viewpoint and tolerance for uncertainty decides how you weight these different variables. However you do it, you will be exactly as successful as you are careful and businesslike.

So all around, I think this book is an excellent introduction to value investing. It captures the spirit of great investors, while remaining readable and clear. Well worth your time.

I like the idea, but...

Having recently undertaken the wonderful journey of studying Benjamin Graham and Warren Buffett through reading most of their writings, I felt obligated to comment on this book. Many important concepts are nicely explained, and the format is pleasing, however, a disturbingly significant number of facts presented are gross misinterpretations.

The author does a nice job of explaining commonly used Wall Street terminology and concepts, for the novice. However, she fails in the infinitely more important task of consistently explaining the core concepts of investing (and not just stock speculating -- as so many of us all too often do).

Two (among the many) misleading points involve investment diversification and Buffett's used cigar-butt approach. She implies both Graham and Buffett whole-heartedly embrace diversification. Unless I have been reading the wrong Graham and Buffett, they certainly do not do so, unconditionally. The author further misrepresents Buffett when she actually leaves it that he finds the "cigar butt" approach, a wise way to buy businesses. He indeed called that method, "foolish" [Mr. Buffett: if that is no longer the case, please excuse my error.]

If you are searching for enlightenment, the way I was, you will be 1000 times better served to read "The Essays of Warren Buffett", arranged by Cunningham and, of course, Graham's "The Intelligent Investor".

Janet Lowe explains that value investing a-la Benjamin Graham is not a simple matter of following a cookbook recipe, i.e. screening stocks based on x number of factors, ratios, or other factors being met. Instead, it is a philosophy which must be applied by calculating several measurements of value which, when combined with a "margin of safety", diverse portfolio and enough time, should produce gains. My problem with "Value Investing Made Easy" is that Ms. Lowe fails to adequately explain the variables in her value formulas, repeatedly quotes other investment authors directly from their books, such as Peter Lynch out of "Beat the Street," and takes the easy way out by consistently presenting either or alternatives without recommending when to pick a particular alternative, one of which will work, the other of which will fail or not work as well, but had you chosen her other recommendation, it would have worked better.

An example of Ms. Lowe not adequately explaining the variables in her valuation ratios is her attempted application-explanation of Ben Graham's formula for intrinsic value, which is the most important measurement in the book. The formula is E(2r+8.5) x 4.4/Y with E representing earnings, r representing earnings growth, and Y representing the current yield on AAA corporate bonds. Perhaps you are asking yourself which earnings E represents, the trailing 12 months, the current years, etc. I sure did. Same thing with r, is it the percentage increase of earnings growth from the trailing 12 months to the current year? Ms. Lowe simply assigns a value for each in her example without explaining its basis.

As for quoting other authors, and investment gurus I might add, Ms. Lowe repeatedly quotes Peter Lynch directly out of "Beat the Street." If I had known this, My time would have been better spent reading "Beat the Street" again. Ms. Lowe also indirecly quotes Warren Buffet ad nauseum.

Finally, and perhaps most frustrating of all, Ms. Lowe fails to take a position on what she believes to be a winning value investment strategy or strategies, i.e. hard and fast strategies to follow based upon particular objectives or risk tolerance (Note I did not write market conditions/timing). Perhaps this was her intent since she was attempting to explain the philosopy of value investing. However, if, as a potential reader, you are seeking advice or instruction on applying a successful value approach to investing in common stocks, I would strongly advise you to turn elsewhere.

J.K.S. of Anchorage Alaska