Basic Thoughts and Ideas for Big Results

Christopher Browne of Tweedy, Browne fame just published a book called The Little Book of Value Investing. In it, he lays out some basic thoughts and ideas on how the aspiring investor may add to his financial breadbasket.

The book is in the Graham and Dodd tradition - espousing simple verities about the virtues of buying cheap stocks. It's like a little country store. But instead of polished apples and sweet corn, the shelves hold bags of polished wisdom and sweet dollops of moneymaking advice.

But what struck me, buried among the homespun maxims, was his emphasis on global investing.

Browne gleefully tells readers of his exploits kicking around in faraway markets. Like an eager traveler returning from his first look at the pyramids of Egypt or gazing up at the Incan ruins of Machu Picchu, Browne talks about the glories of picking up cheap stocks in Japan, South Korea and Switzerland.

In the late 1990s, free-spirited investors could find Japanese homebuilders, media companies and textile mills selling for less than the cash on their books. In 2003, Browne uncovered a Swiss conglomerate loaded with valuable assets - real estate, a sheet metal business, a sporting goods division and more. The stock traded for only one-half of an understated book value. In two years, the stock doubled. He writes about Dae Han Flour Mills of South Korea, which he picked up for one-third of book value.

This is merely a small sample of Browne's profit-laden travelogue. A globe-trotting treasure hunter, Browne spends considerable ink on the rationale behind global investing, understanding foreign accounting, what to make of foreign currencies and more.

But for all the convoluted reasons others often offer up for investing in foreign stocks, Browne offers one that's crystal clear: "If you expand your horizons to all the developed countries of the world," he writes, "you can double your chances of finding cheap stocks."

To dispel any fears of putting one's hard-earned dough in some flighty company glued together with matchsticks, Browne offers another basic, yet compelling, observation.

When you rank the top 20 companies in the world by sales, you find 12 of them maintain headquarters in Europe or Asia. "The world's largest oil company is based in the United Kingdom [BP]," Browne writes. "And three of the five largest auto manufacturers are found in Germany and Japan."

Browne is a man who follows his own recipes. Today, his firm, Tweedy, Browne, is finding bargains overseas. Of the $14 billion in assets it manages, about 70% of the pile is in international stocks. And about a third of that is in small companies with market caps of $5 billion or less. Among his current favorite spots are South Korea, Japan and Mexico.

Review by a writer for Agora Financial, publisher of economic and financial analysis including Financial Reckoning Day Fallout: Surviving Today's Global Depression, The New Empire of Debt: The Rise and Fall of an Epic Financial Bubble, and I.O.U.S.A.: One Nation. Under Stress. In Debt.

An Excellent Primer on Value Investing

This book provides a distilled education in value investing from one of the more accomplished practioners of the art. Browne argues that value investing consists of few a solid principles that can be implemented by anyone with an average IQ. He breaks value investing down into a few quantitative and qualitative steps. This consists of searching for companies where you can in essence buy a dollar for sixty cents while buying earnings on the cheap. Once you find these companies he explains how to evaluate their balance sheets and P&Ls. Following this quantitative filtering he provides a series of qualitative questions to further evaluate potential investment opportunities. He goes on to explain the benefits of looking beyond the US for investment opportunities and then imparts a dose of investing wisdom and some contrarian thoughts on portfolio management which I found highly refreshing. I think this book might serve as a good adjoining text to Joes Greenblatt's ROIC-earnings yield strategy, if you're otherwise sensibly uncomfortable with picking stocks from a screen without any further due diligence, which by the way, Browne strongly counsels against, and which he describes as a recipe for disaster.

The only reason I'm not giving this book five stars is because to date I have followed a successful passive indexed based investment strategy with a focus on asset allocation, ala William Bernstein. However, I've been thinking of devoting a small portion of my portfolio to individual stocks which is why I decided to read Browne's excellent little book.

Valueless investing

This little book might possibly be of some value to someone but I found it to be very superficial treatment of an important topic. One of the few investment books I would gladly loan without expectation of a return.

Value Investing in Simple English

Value investing, in my opinion, is the most logical way of investing. This investment style is very simple to understand yet so few investors and professional money managers follow it. Value investing boils down to these principles:

* Buy stocks when they are on sale
* Know the value to determine if the stock is on sale
* Invest long-term because it's a marathon, not a sprint

The authors did an excellent job of describing this style of investing to readers. Some of the most successful investors, such as Warren Buffett, practiced value investing for decades. If it worked for them, it should at least be considered by other investors.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market

Good Introduction to Investing

This book was an easy read that introduced the concepts of value investing very well. It will open up a lot of possibilities for those who take notes. If the reader does not know a single thing about stocks this book will have some concepts that will take some time and practice before fully understanding them. That is why I would recommend getting another book that defines stock market terms and concepts in a beginner's format in conjunction with this one. There are some websites online, such as ABOUT.COM that offers a helpful "class" on stocks that will be most beneficial.

I thought this was an outstanding book for the beginner investor to help them establish good trading habits early on, but will leave them wanting more. To become truly successful at trading, more care and education will be necessary. In no way was this a magic book of knowledge that will leave the reader capable of making millions overnight, which, by the way, isn't what this book is about.

This book is HIGHLY recommended for the beginner investor, and recommended for the intermediate investor.