Value Investing (within an Austrian context)

C.J. Maloney reviews the book, Applied Value Investing: The Practical Application of Benjamin Graham and Warren Buffett's Valuation Principles to Acquisitions, Catastrophe Pricing and Business Execution, by Joseph Calandro, Jr.

Maloney points out something those of us sympathetic to the Austrian School of economics know all too well. Namely, that followers of Austrian economics can easily feel like perma-bears (or be accused of such, see comments made about folks like Jim Grant over the years), with urges to stockpile guns and gold and head for the hills. Yes, I'm exaggerating. But only to make a point that is largely true.

About the book and Mr. Calandro, Maloney writes:

He laments that many investment how-to guides "give great advice on what to do, but they do not tell you how to do it" (p. xix).

Mr. Calandro set out to remedy that shortfall and created a book that stands out from the crowd. To all those college kids who have ever asked me if I apply my "macro" beliefs to my investment methodology, I strongly suggest you pick up what Mr. Calandro has to offer. It is well written and worthwhile.

Coming in at an easy-breezy 230 pages, the bulk of the book is devoted to the use of the Graham-Dodd methodology to analyze a number of large-scale equity investments, among them Edward Lampert's 2004 acquisition of Sears and Warren Buffett's GEICO and Gen Re acquisitions. It is Buffett's investment acumen more than anyone else's that Mr. Calandro admires. Calandro shares the man's faith in the usefulness of the Graham-Dodd approach (which says it is possible to outperform the market over the long run) versus the "efficient market theory" (EMT, which states that you cannot).

I note that the book's cover carries an endorsement from none other than Seth Klarman of the Baupost Group. Probably worth checking out.

Comments

[Miguel barbosa]

Dear Controlled Greed,

I conducted an interview with Joe Calandro a friend of mine regarding this book. Perhaps your readers might like it.

http://www.simoleonsense.com/miguel-barbosa-interviews-joe-calandro-jr-author-of-applied-value-investing/

There is also a collection of his academic works here

http://www.simoleonsense.com/the-academic-works-of-joe-calandro-jr/

I apologize for being self promotional. However I think your readers might enjoy the articles and id like to add value to you given how much your blog has given me.

I'm a big fan of this blog and I run SimoleonSense.com
a multidisciplinary and value investing oriented blog. I am friends with many of the bloggers on your blog roll.

Happy new year!
Miguel

Founder of SimoleonSense.com

[John]

@Miguel: Thanks for your kind words about this blog, and for the great links.