"What happened in the market? What lies ahead? Investors should be required to read Tom Au’s A Modern Approach to Graham and Dodd Investing. Tom delivers a commonsense road map for baby boomer professional and individual investors navigating the treacherous investment waters. This is the best investment book I have read in twenty–three years."
Scott Kingsley Swift, Vice President, Merrill Lynch, CFM
"Many times I’ve found myself reading through investment classics, wishing that they were more relevant to our present world; the information companies report, market conditions, today’s business culture, and the expectations modern stock investors have developed based on a large set of alternative investment choices. Finally, my wish, and those of other investors who’ve felt the same, has been granted by Thomas Au and his soon–to–be classic, A Modern Approach to Graham and Dodd Investing."
Marc H. Gerstein, Director of Investment Research, Reuters
"In an age of easy money and easy credit, Thomas Au’s A Modern Approach to Graham and Dodd Investing reminds us that successful investing is a product of long–term prudent strategies based on disciplined investment decisions. This work is an excellent and timely in–depth analysis on value investing which is a must read, particularly during these volatile financial times."
David Marshall, President, Emerson Partners, LLC
"This is an informative, readable book that presents a comprehensive framework for practitioners of deep value investing. Thomas Au, a proven investor in the value world, shows that the principles of value investing can be applied to a broad range of investment issues from analyzing the key line items on the corporate balance sheet to international investing and dynamic asset allocation. Au’s underlying message is that value investors have long time horizons, both in looking back at historical precedents and in looking forward, well beyond the next quarterly earnings report. Most importantly, the book is filled with real–time, real–world examples where Au applied the value approach to construct a winning portfolio. Au is gold!"
Leland Crabbe, Portfolio Manager, Credit Suisse Asset Management
"A refreshing look at the methods for ensuring a margin of safety in one’s investments developed by one of the true masters. Sadly, in this liquidity–driven bubble market, investors have once again lost their way. This book will grow in acknowledgement as today’s stock market ‘sheep’ are once again led to their slaughter for having ignored such wisdom."
Richard J. Greene, Thunder Capital Management
"Tom Au’s update of Graham and Dodd’s security analysis is a must read for any serious investor. With the technology bubble behind us, investors have come back to the proven principles of value investing. Tom has put together a powerful framework for value investing in the twenty–first century."
Gerard Watson, Managing Director, Santander Investments
PART I Basic Concepts 1
CHAPTER 1 Introduction 3
CHAPTER 2 Investment Evaluations and Strategies 16
PART II Fixed–Income Evaluation 29
CHAPTER 3 Foundation of Fixed Income 31
CHAPTER 4 Fixed–Income Issues of Corporations 47
CHAPTER 5 Distressed Fixed Income 63
PART III Equity Evaluation 79
CHAPTER 6 Cash Flows and Capital Expenditures 81
CHAPTER 7 Analysis of Asset Value 96
CHAPTER 8 Some Observations on the Value of Dividends 112
CHAPTER 9 Some Warnings about the Use of Earnings in Valuation 127
CHAPTER 10 Sales Analysis 143
PART IV Special Vehicles for Investment 157
CHAPTER 11 A Graham and Dodd Approach to Mutual Funds 159
CHAPTER 12 A Graham and Dodd Approach to International Investing 174
CHAPTER 13 A Graham and Dodd View of Real Estate 187
PART V Portfolio Management 203
CHAPTER 14 The Question of Asset Allocation 205
CHAPTER 15 The Concepts of Graham and Dodd versus Modern Theories and Practices 220
CHAPTER 16 Case Studies in Graham and Dodd Investing 234
CHAPTER 17 A Real–Time Experiment 257
PART VI Some Contemporary Issues 271
CHAPTER 18 A Historical View of the Dow and the Market 273
CHAPTER 19 Some Disquieting Thoughts on Excessive Credit Creation 292
CHAPTER 20 Generational Cycles in the American Stock Market 306