Common Stocks & Common Sense: The Strategies, Analyses, Decisions, and Emotions of a Particularly Successful Value Investor
Exclusively distributed by Penguin Books
Ed Wachenheim is one the most well-respected investors on Wall Street as founder, chairman and CEO of Greenhaven Associates for the past 28 years. Between 1990 and 2014, a typical portfolio of stocks that he managed enjoyed an average annual return of 19.9%, achieved with relatively conservative stocks and without the use of financial leverage. Wachenheim now wishes to share his investment strategies and experiences in an educational book on common stock investing so that others can benefit from his know-how. Wachenheim will teach the reader about common stock investing by writing about and analyzing actual investments that he and other successful investors, have made.
1 My Approach to Investing
2 The Brief Story of My Life
Successful investing is about predicting the future more accurately than the majority of other investors; we predict a change in IBM's cost structure.
4 Interstate Bakeries
Successful investing often is heavily dependent on the capabilities and incentives of corporate leadership.
5 U.S. Home Corporation
Investors can become frustrated when their swans are priced as if they are ugly ducks.
Large profits can be earned by successfully predicting a major positive change in the fundamentals of a company or an industry.
7 Union Pacific
Investors often do not adequately differentiate between short-term discrete problems and long-term systemic weaknesses.
8 American International Group
I went to bed with Miss America and woke up with a witch; this can happen to even the most careful of investors.
Using common-sense logic, we conclude there is a high probability that the U.S. housing market will improve markedly in the near future; investing is logical and probabilistic.
We conclude that the company's earnings and share price are being depressed by cyclically low demand for appliances and by abnormally high costs for raw materials; successful investors should purchase their straw hats in winter.
Opportunities can occur when great companies develop temporary problems.
12 Southwest Airlines
When tight markets lead to sharply higher prices for goods or services, earnings and share prices can become buoyant, even for normally unattractive businesses
13 Goldman Sachs
Large profits can be earned when perceptions temporarily differ from realities.
14 A Letter to Jack Elgart
A letter that summarizes my approach to investing and that includes a number of do's and don'ts that I found useful in my career.
About the Author
Title reviewed by Money Life