by Frederick K. Martin
Compared with other books that I have read about Ben Graham, Benjamin Graham and the Power of Growth Stocks is definitely the clearest, most concise, and easily the most useful of all of them. What makes this book particularly interesting is how it revisits the investing philosophy of Mr. Graham with an angle toward using, maybe even zeroing in on, just growth stocks. Once it defines growth stock and clarifies why Mr. Graham’s principles apply, it can then expound on the most tangent of Mr. Graham’s principles and expand them in light of the modern investment environment. What really makes this book a winner is how it reproduces a long lost formula of Mr. Graham’s and then explains a tangible, executable method for actually using that formula to calculate the value of a growth stock and whether or not it is one that should be invested in. Too often we hear some investment advisor tell us, “This formula works, unless of course it doesn’t”. There is none of that here. You set the margin of safety (explained in the book) where you are comfortable. You set the growth rate (here called the “hurdle rate”) you need (or want) to achieve. You look up or calculate the values for the company you want to invest in. Then you apply Graham’s formula. If the numbers match, you’ve found a stock you can safely and confidently invest in. If they don’t, you have to keep looking or change your expectations. The choice is left to you. While I wouldn’t recommend this approach to a beginner, I think this methodology is ideal for a disciplined investor. By constantly referring to Graham’s teachings, the author has really reached an investment methodology that is understandable, achievable, and repeatable. The writing is crisp and friendly, and the style is homey without being corny or preachy. Above all, the author has a solid understanding of the investment principles of Ben Graham, as well as experience using them, and producing positive investment results. Without a doubt, Ben Graham’s growth stock approach is sensible, making this book probably the best investment book I’ve read this year. That’s definitely worth the full load of dollar marks.
