Kevin, thanks for your commentary. It prompts a couple of stories. It the early days of the personal computer and the ability of spreadsheets to calculate to 3, or more, decimal places, I was invited to give a talk. It had two titles: Why is my computer not registered as an investment advisor? And: Warren, why are you so smart? The answer to the second question was simple: Warren understands significance. Was it Keynes who said that he would rather be roughly right than precisely wrong? Three times I heard someone ask Warren at an annual meeting how he values a company. Each time he explained patiently that the value of a company is the present value of future cash flows/earnings. I vaguely recall that he threw in ‘estimated into infinity’. Each time he asked Charlie for a comment. The first: I’ve no comment; the second, no comment. The third time, he piped up: “In all of the years I’ve known Warren I’ve never seen him calculate a present value.” To this Warren shot back: ya, if I had to, it wouldn’t be worth it. That was a very wise exchange: you have to understand the source of value, which, incidentally, future earnings is not a vintage Graham/value source, but it ought to be obvious to you. I suspect AI might fool many into thinking they have false precision.
When I heard Jason Zweig say that he completely rewrote his commentary and never even looked at his 2003 commentary, I decided to go ahead and purchase the book. The copy I have that I purchased in 1995 changed my life, along with Lowenstein’s biography of Warren Buffett. The 2003 revised edition is also a valuable resource and I’ve gifted that version several times.
I really admire that he completely started from scratch on the commentaries. Listening to him on the Richer, Wiser, Happier podcast, it’s clear how seriously he takes the responsibility of being in charge of “updating” this classic book.
In another podcast a few years ago, Jason Zweig spoke about how he learned to have no "sunk costs" when working with Daniel Kahneman on a book. Kahneman had no sunk costs at all on prior writing. He would just throw out work and start over if he wasn't happy with it. I suspect that's the origin of how this came about.
Can't wait to read it and Jason will have a super tough job bettering his last effort ( I think he'll do it though).I read it for the 3rd time in the midst of the recent meme stock craze and it was just an exact replication of the Dot com stuff he covered so well. It was just incredible how relevant Jasons 2003 writings were in the 2021 craze.
"Graham has more to teach us from a qualitative standpoint than he does from a quantitative one."
IMO you're spot on and I think any investor who has read Buffett will agree. Thinking of yourself as a part owner of the business, the concept of Mr. Market, and the margin of safety are the three most important ideas in investing.
This really got hammered home for me when reading through the 1995 Berkshire AGM. Someone asked Buffett about Ben Graham’s investing principles and whether they’re still relevant today and he said they will never go out of style. Not the mathematical formulas, but like you say — Mr. Market, margin of safety, being a part-owner, etc.
This is a very nice piece. Thanks. Warm wishes, William Green
Thanks William! Much appreciated :)
Kevin, thanks for your commentary. It prompts a couple of stories. It the early days of the personal computer and the ability of spreadsheets to calculate to 3, or more, decimal places, I was invited to give a talk. It had two titles: Why is my computer not registered as an investment advisor? And: Warren, why are you so smart? The answer to the second question was simple: Warren understands significance. Was it Keynes who said that he would rather be roughly right than precisely wrong? Three times I heard someone ask Warren at an annual meeting how he values a company. Each time he explained patiently that the value of a company is the present value of future cash flows/earnings. I vaguely recall that he threw in ‘estimated into infinity’. Each time he asked Charlie for a comment. The first: I’ve no comment; the second, no comment. The third time, he piped up: “In all of the years I’ve known Warren I’ve never seen him calculate a present value.” To this Warren shot back: ya, if I had to, it wouldn’t be worth it. That was a very wise exchange: you have to understand the source of value, which, incidentally, future earnings is not a vintage Graham/value source, but it ought to be obvious to you. I suspect AI might fool many into thinking they have false precision.
Great stories! (And an excellent point about AI…)
When I heard Jason Zweig say that he completely rewrote his commentary and never even looked at his 2003 commentary, I decided to go ahead and purchase the book. The copy I have that I purchased in 1995 changed my life, along with Lowenstein’s biography of Warren Buffett. The 2003 revised edition is also a valuable resource and I’ve gifted that version several times.
I really admire that he completely started from scratch on the commentaries. Listening to him on the Richer, Wiser, Happier podcast, it’s clear how seriously he takes the responsibility of being in charge of “updating” this classic book.
In another podcast a few years ago, Jason Zweig spoke about how he learned to have no "sunk costs" when working with Daniel Kahneman on a book. Kahneman had no sunk costs at all on prior writing. He would just throw out work and start over if he wasn't happy with it. I suspect that's the origin of how this came about.
I’m gonna have to go back and listen to that one. Sounds very interesting.
Can't wait to read it and Jason will have a super tough job bettering his last effort ( I think he'll do it though).I read it for the 3rd time in the midst of the recent meme stock craze and it was just an exact replication of the Dot com stuff he covered so well. It was just incredible how relevant Jasons 2003 writings were in the 2021 craze.
Completely agree. I really like the new edition, but I’m keeping the 2003 one too because his writings on the dot-com bubble are so good.
"Graham has more to teach us from a qualitative standpoint than he does from a quantitative one."
IMO you're spot on and I think any investor who has read Buffett will agree. Thinking of yourself as a part owner of the business, the concept of Mr. Market, and the margin of safety are the three most important ideas in investing.
This really got hammered home for me when reading through the 1995 Berkshire AGM. Someone asked Buffett about Ben Graham’s investing principles and whether they’re still relevant today and he said they will never go out of style. Not the mathematical formulas, but like you say — Mr. Market, margin of safety, being a part-owner, etc.