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Thomas Macpherson
Thomas Macpherson
Articles (104)  | Author's Website |

A Review of 'Invest Like a Guru'

Charlie Tian has written an outstanding book that all investors should read

May 15, 2017 | About:

The first stock I ever bought was in the eighth grade during a stock market competition. My current affairs teacher – a certain Mr. Brown – wanted to demonstrate the markets were nothing more than a vast national casino. Perusing the newspaper stock prices (how quaint!), I made up my mind to buy Gensco. I had absolutely no idea what Gensco was, what it sold or whether it even made money. The really attractive fact was the shares were trading at 23 cents per share. Just think how many of these so-called shares I could buy! Mr. Brown was wrong that day. I did not see the markets as a nefarious casino, but rather a candy shop where the only thing that matters is how many pieces can you buy with the money you have.

Oh, how I could have used Charlie Tian’s book, “Invest Like a Guru,” along with his website, GuruFocus.com! Many investors – much like my eighth grade self – fail to create and follow a structured and tested methodology in stock investing. Usually driven by whims and emotions, investors rarely think of investing as owning a piece of a business. Rather, they see investments as dots and numbers as a backdrop to human megaphones like Jim Cramer.

Tian has written a book that makes value investing a business operation rather than the current Wall Street marketing operation. His overall theme is essential to succeeding in the long term – use hard data and valuable lessons from the world’s greatest investors to inform your stock purchase decision-making. “Invest Like a Guru” gives its readers a clearly delineated process and great examples for each point made chapter by chapter. Readers come away with an excellent framework on how to look at – and implement – a sound strategy for value investing.

I believe there are four major characteristics of a great book on investing – clear and understandable language, examples to highlight your thesis, timeless wisdom whether in bull or bear markets and complex models broken down in a simple and clear manner.

Language people understand

I remember reading Martin Whitman (TradesPortfolio)’s “The Aggressive Conservative Investor” and being remarkably frustrated by his constant use of acronyms. The concept of value investing – while relatively straight forward – requires the author to speak the language of investor and non-investor alike. Tian’s prose is clear, direct and easy to read. A reader will never be left wondering what in the world a concept or phrase might mean.

Examples to make your case

I am not alone in thinking that examples are a great way of communicating concepts to the reader. Tian’s discussion of JC Penney (NYSE:JCP) in the “Turnaround” section gives the reader a crystal-clear example of the author’s thoughts on investing in corporate makeovers. You will find dozens of such examples sprinkled throughout the book.

Its relevance is timeless

For readers of investment books, the relevance of the content (and that does not necessarily mean the timeliness of the examples) can make or break their interest in the content. Great investment books use examples that are timeless in nature but always relevant, be it a period of bull or bear markets.

Simplifying complex problems

One attribute of Warren Buffett (Trades, Portfolio)'s is to take complex issues and break them down into a pithy, down-to-earth concept. Tian takes this model and brings it to fruition in “Invest Like a Guru”. Chapter three, “Buy Only Good Companies,” takes a complex issue of defining what a “good” company is and breaks out several easy-to-understand attributes investors should look for in their portfolio holdings.

Conclusion

Overall, I greatly enjoyed reading Tian’s “Invest Like a Guru.” It has certainly earned a place in my investment library alongside Benjamin Graham, Charlie Munger (Trades, Portfolio), Jack Bogle and Michael Mauboussin. I cannot think of a better recommendation than that. Go out and grab your copy. I am pretty sure you will enjoy it as much as I did.

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About the author:

Thomas Macpherson
I served as CIO of the Nintai Charitable Trust and consult with Dorfman Value Investments as an investment advisor. I look for companies with high ROIC, significant free cash flow, no debt and that trade at a deep discount to fair value. Much of my writing consists of thoughts on the Nintai Charitable Trust portfolio. Unless otherwise stated, views represented in my articles are based on my former role as CIO of the trust, which I personally managed.

Visit Thomas Macpherson's Website


Rating: 5.0/5 (8 votes)

Voters:

Comments

vkumarm1973
Vkumarm1973 - 1 week ago    Report SPAM

Excellent Book written by Charlie Tian.

I or someone who is not premimum subscriber of "grufocus.com" would have appreciated more if the stock screens discussed in the book have followed real examples of 2016 or year before.

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