Gone to the Dogs: The Little Book That Beats The Market

Friday, July 3, 2009

The Little Book That Beats The Market

Recently I was interviewed by Simon Brown of Classic Talk Radio in his programme JSE Direct. The subject of the interview was a book that stands out on my library shelf, Joel Greenblatt's The Little Book That Beats The Market.

You can listen to the episode by clicking the link below:

Simon Brown talks to Dr Adrian Saville, CEO of Cannon Asset Managers

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My Investment Philosophy

Welcome to my blog. I am a disciple of contrarian, deep-value investing, and consider much of what passes as investment opinion to be little more than 'market noise'. In this vein, I will only post to this blog when I have something of value to add. The rest must remain noise.

My conviction for contrarian investing derives from the simple yet powerful arguments that rest behind successful value investing: it pays to be contrarian, to be patient and to aim to strip emotion out of investment decision making. If you can capture these investment forces, then you stand an exceptional chance of being ahead of the market.

But sticking to the knitting is not as easy at it appears. Much stands in the way of successful investing, and even more so in the case of the contrarian portfolio. As the term implies, it is mathematically impossible that the average investor is contrarian. Further, to be contrarian means that you must willingly adopt and maintain a stance that is at odds with the mainstream. And then there is always the noise to act as a constant distraction and source of distress to investors.

Only a handful of professional managers consistently beat the street. This outcome is an indictment of the professional fund management industry; yet it also demonstrates the power of disciplined value investing.

Painted on this canvas, this blog explores the philosophy and practice of investing as a deep value manager.

A Value Manager's Library

Anthony M. Gallea and William Patalon III (1998) Contrarian Investing. New York: Prentice Hall.
Ayn Rand (1952) The Fountainhead. New York: New American Library
Ben Warwick (2000) Searching for Alpha: The Quest for Exceptional Investment Performance. New York: John Wiley & Sons.
Benjamin Graham (2006) The Intelligent Investor, Fourth Revised Edition. New York: HarperCollins.
Bruce Greenwald, Judd Kahn, Paul Sonkin and Michael Van Biema (2001) Value Investing: From Graham to Buffett and Beyond. Hoboken, New Jersey: Wiley.
Burton G. Malkiel (1990) A Random Walk Down Wall Street, Fifth Edition. New York: Norton and Co.
Charles Ellis (2004) Capital: The Story of Long-Term Investment Excellence. Hoboken, New Jersey: Wiley.
David Dreman (1998) Contrarian Investment Strategies: The Next Generation. New York: Simon & Schuster.
Jim Collins (2001) Good to Great: Why Some Companies Make the Leap ... and Others Don’t. New York: Harper Collins.
Joel Greenblatt (2006) The Little Book that Beats the Market. Hoboken, New Jersey: Wiley.
John Neff with S.L. Mintz (1999) John Neff on Investing. New York: John Wiley & Sons.
John R. Nofsinger (2002) Investment Blunders of the Rich and Famous. Upper Saddle River, New Jersey: Pearson Education.
Jonathan Davis (2004) Investing with Anthony Bolton: The Anatomy of a Stock Market Phenomenon. Petersfield, Hampshire: Harriman House Publishing.
Michael E. Porter (1996) On Competition. Boston: Harvard Business Review.
Michael Lewis (2004) Moneyball: The Art of Winning an Unfair Game. New York: Norton & Co.
Peter L. Bernstein (1992) Capital Ideas: The Improbable Origins of Modern Wall Street. New York: The Free Press.
Richard Branson (1999) Losing My Virginity: How I’ve Survived, Had Fun, and Made a Fortune Doing Business My Way. New York: Three Rivers Press.
Robert A. Haugen (2001) The Inefficient Stock Market: What Pays Off and Why. Upper Saddle River, New Jersey: Prentice Hall.
Robert G. Hagstrom, Jr (1994) The Warren Buffett Way: Investment Strategies of the World's Greatest Investor. New York: John Wiley & Sons.
Terry Burnham (2005) Mean Markets and Lizard Brains: How to Profit from the New Science of Irrationality. Hoboken, New Jersey: Wiley.
Thomas J Peters & Robert Waterman (1982) In Search of Excellence: Lessons From America’s Best-Run Companies. New York: Harper & Row.
Vijay Singal (2004) Beyond the Random Walk: A Guide to Stock Market Anomalies and Low-Risk Investing. Oxford: Oxford University Press.

If (Rudyard Kipling)

If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or, being lied about, don't deal in lies,
Or, being hated, don't give way to hating,
And yet don't look too good, nor talk too wise;

If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with triumph and disaster
And treat those two imposters just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to broken,
And stoop and build 'em up with wornout tools;

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on";

If you can talk with crowds and keep your virtue,
Or walk with kings - nor lose the common touch;
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run -
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man my son!

Gone to the Dogs

Friday, July 3, 2009

The Little Book That Beats The Market

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Post a Comment

john wolfgang von goethe (1749-1832)

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A Value Manager's Library

If (Rudyard Kipling)

ayn rand (1905-1982), the fountainhead (1943)

Carl Sagan (US Astronomer, 1934-1996)

David Dreman