Books

The Personal MBA

A World-class Business Education in a Single Volume - Josh Kaufman - Copyright © 2010 by Worldly Wisdom Ventures LLC - Portfolio / Penguin
A x - The Personal MBA - Josh Kaufman - personalmba.com - 468 pages - The Personal MBA Masterclass - Leading@Google YouTube - joshkaufman.net - changethis.com
p11 - Seth Godin - sethgodin.com - MBA Stanford - 1983-86 game management at Spinnaker Software / Mattel - Seth Godin Productions NY - Yoyodyne / Yahoo! - 1998-2000 Yahoo! vice president - 2006 Sqidoo most visited community website platform, allows users to create pages (called lenses) for subjects which interest them, and to use those pages to sell products for profit or charitable donation, 2010 1.5 million users - squidoo.com - Seth's blog sethgodin.typepad.com

Margin Of Safety

Risk-Averse Value Investing Strategies for the Thoughtful Investor - by Seth A. Klarman

Contents

Acknowledgments ix
Introduction xiii

I Where Most Investors Stumble 1
1 Speculators and Unsuccessful Investors 3
2 The Nature of Wall Street Works Against Investors 19
3 The Institutional Performance Derby: The Client Is the Loser 35
4 Delusions of Value: The Myths and Misconceptions of Junk Bonds in the 1980s 55

II A Value-Investment Philosophy 79
5 Defining Your Investment Goals 81
6 Value Investing: The Importance of a Margin of Safety 87
7 At the Root of a Value-Investment Philosophy 105
8 The Art of Business Valuation 118

III The Value-Investment Process 149
9 Investment Research: The Challenge of Finding Attractive Investments 151
10 Areas of Opportunity for Value Investors: Catalysts, Market Inefficiencies, and Institutional Constraints 162 11 Investing in Thrift Conversions 182
12 Investing in Financially Distressed and Bankrupt Securities 189
13 Portfolio Management and Trading 209
14 Investment Alternatives for the Individual Investor 222

Glossary 229
Bibliography 241
Index 243

Acknowledgments
p3 - ix - Studied at HBS Wikipedia (Harvard Business School - Boston, MA, US) - MBA (Master of Business Administration) - IUBH Fernstudium MBA (International University of Applied Sciences)

Started career working with Max L. Heine (1911–1988) and Michael F. Price (born 1951) - Mutual Series Fund, Inc. (1949), now part of Franklin Templeton Investments (1947 - Employees 8,453 (2011) - Revenue $ 7.14 Billion (2011)) - Book dedication to Max - Founding Baupost Group
p4 - x - Finest business contacts - Baupost colleagues Howard, David, Paul, and Tom reviewed manuscript - also friends Lou Lowenstein, David Darst, Henry Emerson, and Bret Fromson and more

Introduction
p6 - recommendation to follow value-investment philosophy
p7 - avoiding where others go wrong - no fear to advice people to increase competition - themes already discussed by Benjamin Graham and David Dodd in Security Analysis etc. - Intelligent Investor describes value investing less academic - Warren Buffett most successful value investor - wrote countless articles - In any event this book alone will not turn anyone into a successful value investor - value investing requires a great deal of hard work, unusually strict discipline, and a long-term investment horizon - few are willing and able to devote sufficient time and effort to become value investors, and only a fraction of those have the proper mind-set to succeed
p8 - Interplanetary visitors would question the intelligence observing the business behavior - Wall Street seems often like casino
p9 - Individual and institutional investors fail - focus on return while ignoring risk - search for a simple formula - investment success cannot be captured in a mathematical equation or a computer program - Chapter 1-4 themes - behavior of institutional investors
p10 - junk bonds - part of the historical ebb and flow of investor sentiment between greed and fear - institutional investors buy with gusto like lumbering behemoths, it becomes overvalued and creates selling opportunities - the disregard for investment fundamentals sometimes affects the entire stock market - example
p11 - Sequoia Fund Inc. - Ruane, Cunniff & Goldfarb - sequoiafund.com - about rise and fall of stock
investors must choose sides - effortless path wrong side - emotional responses dictated by greed and fear and a short-term orientation - investors think of stocks like sowbellies - guessing what other market participants may do and then trying to do it first - playing the stocks-as-pieces-of-paper-that-you-trade game - correct choice - requires a level of commitment most are unwilling to make - fundamental analysis, whereby stocks are regarded as fractional ownership of the underlying businesses that they represent - one form is value investing - recommended - it is simply the process of determining the value underlying a security and then buying it at a considerable discount from that value - the greatest challenge is maintaining the requisite patience and discipline to buy only when prices are attractive and to sell when they are not, avoiding the short-term performance frenzy that engulfs most market participants - contrary to value investors are most investors primarily oriented toward return, how much they can make, and pay little attention to risk, how much they can lose
p12 - Institutional investors are evaluated on the basis of relative performance - value investors by contrast preserve their capital - seek a margin of safety - adherence to the concept of a margin of safety best distinguishes value investors from all others, who are not as concerned about loss - if investors could predict future they wouldn't be value investors all the time - ... - most beneficial time to be a value investor is when the market is falling - those who can predict the future should participate fully, indeed on margin using borrowed money, when the market is about to rise and get out of the market before it declines - unfortunately, many more investors claim the ability to foresee the market's direction than actually possess that ability - value investing is a safe and successful strategy in all investment environments
p13 - ...

I - Where Most Investors Stumble

1 - Speculators and Unsuccessful Investors
Investing Versus Speculation
p16 -

Security Analysis

by Benjamin Graham and David L. Dodd - Sixth Edition - Copyright © 2009, 1988, 1962, 1951, 1940, 1934 by The McGraw-Hill Companies, Inc.

vii - Contents
Foreword by Warren E. Buffett
xi - 4 important personal books - 1 The Wealth Of Nations - Adam Smith - 2 The Intelligent Investor - Benjamin Graham - 3 Security Analysis - Benjamin Graham - 4 Security Analysis Benjamin Graham original handwriting
Class with Ben and Dave - bought first stock at age 11 $115 - read already all library books regarding the stock market - odyssey ended meeting Ben and Dave first through writings and then in person - roadmap for investing, no reason to look for another - they were generous and kind
xii - invest wisely and live wisely - read book at least 4 times
Preface by Seth A. Klarman (1957) - The Timeless Wisdom Of Graham and Dodd
xiii -

Preface To The First Edition
xliii -

Introduction to the Sixth Edition
Benjamin Graham and Security Analysis: The Historical Backdrop by James Grant
p1 -

Introduction to the Second Edition
Problems of Investment Policy
p21 -

PART I
SURVEY AND APPROACH

Introduction to Part I
THE ESSENTIAL LESSONS BY ROGER LOWENSTEIN
p39 -

Chapter 1
THE SCOPE AND LIMITATIONS OF SECURITY ANALYSIS. THE CONCEPT OF INTRINSIC VALUE
p61 - investment no exact science like medicine and law - both individual skills and chance are determining factors - serious analysts suffered 1) prior the crash due to presistence of imaginary values 2) after crash due to disappearance of real values

The Intelligent Investor

Book summary - thelifelifebalance.com

viii - First edition 1950 - emotional discipline - chapter 8 and 20 follow advices
x - one of the best investors and practical investment thinkers of all time -

Notes & Links

Adam Smith (1723-90: British economist and philospher) - The Wealth Of Nations - Wikipedia - The Wealth Of Nations - adamsmith.org - Wikipedia - The Condensed Wealth Of Nations
Jean-Baptiste Say - A Treatise On Political Economy - Wikipedia
Benjamin Graham - Security Analysis - The Intelligent Investor - Summary - TheLifeLifeBalance.com
David LeFevre Dodd - (August 23, 1895 – September 18, 1988)
Warren Buffett Wikipedia - berkshirehathaway.com - The Snowball: Warren Buffett and the Business of Life - TW 831K
Margin Of Safety - Risk-Averse Value Investing Strategies for the Thoughtful Investor - (22a - 30 Ideas) - Seth A. Klarman (21.5.1957 New York City) - Baupost Group - baupost.com

Top 5 books for MBAs, employers and everyone in between - mbafocus.com
bloomberg.com - TW 311K

Vocabulary

Security Analysis

admire - bewundern, hochschätzen, verehren - p xii
arbitrage - Kursunterschied - p xii
bargain - Gelegenheit, Schnäppchen - p xii
connote - bedeuten, konnotieren - p61
elected - ausgewählt, auserwählt - p xii
ignominious - schändlich, schmählich, schmachvoll, schimpflich - p61
indispensable - unerlässlich ... - p61
intrinsic - wesentlich, immanent, inhärent, innewohnend, intrinsisch - p61
ordain - bestimmen, festsetzen - p xii
precious - kostbar, teuer, wertvoll, edel, heißgeliebt - gekünstelt, geschraubt - p xii
reciprocation - Erwiederung - p xii
scope - Spielraum, Bereich, Umpfang, Betätigungsfeld, Aufbabenbereich ... - p61
sound - gesund, einwandfrei, stichhaltig, gut fundiert, intakt, gründlich ... - p61
not a whit - kein bisschen - p xii

Margin of Safety

accurately - genau, exakt, sorgfältig ... - p12
adherence - Festhalten, Anhaften, Befolgen ... - p12
afford - sich etw. leisten - p16
aggregate - Gesamtsumme, Anhäufung, Komplex ... p11
assert - behaupten
assessment - Bewertung, Beurteilung
behemoth - Riesentier, Gigant
bond - Anleihepapier, Verpflichtung, Bindung ... - p16
complicity - Komplizenschaft
decline - fallen, abfallen, nachlassen, verfallen, zurückgehen ...
disregarding - abgesehen von, unbeschadet - p11
engulf - einhüllen, verschlingen, jmdn. in den Abrund reißen
enticing - verführerisch, verlockend
evaluate - geschätzt, bewertet ... - p12
forecast - voraussagen, vorhersagen, vorausplanen, prognostizieren ... - p12
frenzied - fieberhaft, wahnsinnig
gusto - Gefallen, Geschmack
heed (s.o.'s advice) - Rat befolgen
inadvertently - unachtsam, unbeabsichtigt, irrtümlich
indeed - allerdings, in der Tat, zwar, freilich, gewiss - p12
junk bond - hochverzinsliche, hochspekulative Schuldverschreibung
loan - Kredit, Darlehen, Anleihe ... - p16
lumbering - schwerfällig, tapsig, trampelnd
mediocrity - Mittelmäßigkeit - mittelm. Mensch
in particular - im Besonderen, besonders, namentlich, speziell, vornehmlich ... - p12
peer - Kollege, Adliger, Ebenbürtiger ... - p12
preservation - Erhaltung, Bewahrung, Konservierung ... - p12
prevailing - aktuell, üblich, allgemein geltend - p11
stray - abirren, herumirren, abweichen
succumb - unterliegen, erliegen
transact - abschließen, Geschäft abwickeln ... - p16