A Great Investor
s 2006 Lecture on Investment Philosophy and Process
www.csinvesting.wordpress.comteaching/studying/investing Page 1
Graduate Business School Professor IntroductionWe have heard from several investors who are all highly specialized people like
Li Lu, Paul Sonkin
and one of the very large cap traditional disciplined value investors. Great Investor (
)has operated in both those worlds. When
was looking for a portfolio manager--forsomeone--to manage a liquid fund called
. Since that time, GI has run very specializedmoney in specialized areas for a small number of investors with focused objectives. He is an exampleof someone who can bridge both worlds. Keep that in mind during the description of what it is that hedoes.Secondly, in a very real sense, he is responsible for this course. He originally funded the Graham andDodd breakfast, which led to the G&D professorship and which led to this course. This course started14 years ago. He has talked to every single class except one since that.I turn it over to GI
-----Thank you very much for the introduction, professor. It is always a pleasure for me to be here.I just spent an hour with the professor being brought up to date with what is going on (
in this course)
. Iam very pleased to have been responsible for even a small part of this class. Every year, I ask him if Ineed to change my talk. I try to learn and grow each year. Be on guard, there may be a few changeshere.I am retired, and I manage money for family and friends. My daughter works with me. Initially she wasdisappointed when she learned I would teach her all that I knew, and it would take only 30 minutes. Shewould have to make it on her own.Originating and Developing the Value Investing Course at Business SchoolGetting back to the initial idea for this course,
it wasn’t easy to develop a high level course.
All of usinvolved with the program wanted it to be worthy of a program for a major university. It would havebeen all too easy to put together a course that was at a low level
a lot of people coming back orhaving alumni coming back to tell (investing) war stories.
There wouldn’t have been the quality and
substance worthy of the university. It was very important to get a professor of very high stature to dothe work.What I try to do here each year when I come here. Every year I try to become more general. To giveyou specific stock ideas that are timely or investment ideas is beneath this class. I want to elevate theplain and try to maintain a high degree of generality.
I want to talk about ideas, methodologies, and general ways of thinking about investing.
To try to teach you how to fish rather than handing you a fish.
Defining My Terms: Value Investing, Intrinsic Value and Margin of SafetyI want to define some key terms as I use them. We may think we mean the same thing, but I want youto understand exactly what I mean when I use the terms:
Value Investing, Intrinsic Value