Top critical review
The Little Book of Bygone Investing
Reviewed in the United States on February 21, 2021
I liked the first few chapters of this book. It featured a well written foreword by Roger Lowenstein and hit home the logic of value investing. Christopher Browne writes well and I zipped through the book in three hours.
However, reading about investors like Benjamin Graham, Warren Buffet and Walter Schloss buying companies at unbelievably low multiples feels like a bygone era.
I believe the reason value investing worked so well in the past is because it was so intensive.
Before computers, and even calculators, value investors were toiling over balance sheets and running numbers to find the cheapest stocks they could. It was grunt work that required an advanced financial skill set with scarce information that wasn’t available to many people in the mid-20th century.
With the proliferation of computers and access to Fidelity’s financial screens, that grunt work is much simpler. And because it’s simpler, more people can do it. And the more people do it, the harder it becomes to find those deep value buys that are touted throughout the book.
At the end of the book, Browne admits this point and says the process has to remain dynamic, abandoning metrics like book value and looking at acquisition values instead.
I think more of the book should have been devoted to explaining those methods.