09-24-2013, 05:14 PM
Dividend growth investing and value investing are natural allies. To the extent that you can apply value investing principles to the selection and purchase of quality dividend growth stocks, you can significantly improve both your odds of success and your returns.
After reading this post from Tim McAleenan about an excellent but lesser-known book about value investing, I was eager to read it. The book is Margin of Safety, written by Seth Klarman and published in 1991. Apparently, this is a very difficult book to get ahold of, but fortunately Tim’s post includes a link to a .pdf copy of the book.
I’m a couple of chapters in and am finding it a truly worthwhile read. I’m going to put up a few short posts here about the thoughts and insights I’m gleaning from the book, starting here with the introduction.
The introduction presents an overview of the book, and invokes Benjamin Graham and Warren Buffet as predecessors and kindred investors. Then there is this description of what value investing is, which includes the origin of the book’s title:
It has me wondering already if I am generally disciplined enough in my investing approach. And I am really looking forward to re-evaluating the role of stocks such as NLY, FRT, and ARCP in my portfolio. Yes, they juice my annual income stream nicely, but have I evaluated the risks sufficiently?
Chapter 1 is excellent, so I’ll try to post about that soon.
After reading this post from Tim McAleenan about an excellent but lesser-known book about value investing, I was eager to read it. The book is Margin of Safety, written by Seth Klarman and published in 1991. Apparently, this is a very difficult book to get ahold of, but fortunately Tim’s post includes a link to a .pdf copy of the book.
I’m a couple of chapters in and am finding it a truly worthwhile read. I’m going to put up a few short posts here about the thoughts and insights I’m gleaning from the book, starting here with the introduction.
The introduction presents an overview of the book, and invokes Benjamin Graham and Warren Buffet as predecessors and kindred investors. Then there is this description of what value investing is, which includes the origin of the book’s title:
Quote:The focus of most investors differs from that of value investors. Most investors are primarily oriented toward return, how much they can make, and pay little attention to risk, how much they can lose. * * * Value investors, by contrast, have as a primary goal the preservation of their capital. It follows that value investors seek a margin of safety, allowing room for imprecision, bad luck, or analytical error in order to avoid sizable losses over time. A margin of safety is necessary because valuation is an imprecise art, the future is unpredictable, and investors are human and do make mistakes. It is adherence to the concept of a margin of safety that best distinguishes value investors from all others, who are not as concerned about loss.
It has me wondering already if I am generally disciplined enough in my investing approach. And I am really looking forward to re-evaluating the role of stocks such as NLY, FRT, and ARCP in my portfolio. Yes, they juice my annual income stream nicely, but have I evaluated the risks sufficiently?
Chapter 1 is excellent, so I’ll try to post about that soon.