Leithner & Co. adheres strictly to the traditional “value” approach to investment pioneered by in the 1930s by Professor Benjamin Graham of the Columbia University Business School. Although it has been practiced with enormous success since then by his colleagues and students, including Warren Buffett, value investing is distinctly unfashionable today.
It shouldn’t be. Its cautious and constructively sceptical approach, emphasis on the analysis of financial statements and disdain for fads and fashions provides (I believe) a sound basis for investment in uncertain times.
And these are uncertain times. Most investors see naught but blue skies and calm seas ahead, and in some quarters – particularly Internet and other technology sectors – a gold-rush mentality has taken hold. At the same time, however, to a minority of investors the parallels between the Roaring Twenties and the past several years are too close for comfort. At all times, but perhaps particularly in frenetic times such as these, investors should take a step back, check their bearings and review sound principles which underlie the slow but steady accumulation of sustainable wealth.
It is therefore pleasing that Forbes published 8 Investing Rules That Have Stood the Test of Time in its 27 December 1999 edition. It is pleasing because, as acknowledged by Thomas Easton, the article’s author, no fewer than seven of these eight rules are drawn from Ben Graham. It is also reassuring, since these rules (such as “Don’t trust the market to value a stock properly”; “Don’t think that it is easy tobeat the market”; “You can’t time the market”; “Base your expectations not on optimism but on arithmetic”; “Buy old public offerings, not new ones”; “Buy cold industries”) lie at the heart of Leithner & Company’s approach to investing.
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