Value Investing is the most literary of all the investment paradigms. It was invented by Benjamin Graham, a man who was not without certain literary qualities. As a prodigious student at Columbia, he was given a choice of instructorships ranging from Mathematics to English and Philosophy. Pragmatism drew him to finance. Alice Schroder’s Snowball: Warren Buffet and the Business of Life provides very moving portrait of the Dean of Wall Street, often withdrawing from the company of men and longing to commune with the likes Virgil, Horace, and Juvenal. “Money isn’t everything” he tells a young Buffet at a cafeteria in lower Manhattan. No, among Graham’s other pastimes were philandering, teaching, and writing, the trifecta of almost all literary figures.
As to Graham’s literary oeuvre, to read Security Analysis is not to read Ulysses, even if they are of similar length and inscrutability. The writing even in the third edition is stiff and unimaginative. Much improved is The Intelligent Investor co-authored with David Dodd. As the stately and alliterative title suggests, the reader is in for a more nuanced read. It is more than just the anaphora of “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right” or the use of poetic allusions such as Thomas Grey’s “Elegy Written in a Country Churchyard.” Graham’s most literary invention is his personification of “Mr. Market” who puckishly buys and sells securities and acts the perfect foil to the characters of “The Enterprising Investor” or “The Defensive Investor.” Few writers are able to distill the madness of a fickle market with such a light touch and not since Melville’s “Bartelby, the Scriverner” is there a more excoriating portrait of Wall Street.
With Graham as a mentor, what else could he produce but writer like Warren Buffet? His shareholder letters are already classics. Since 1977 the travails of business management has never been so lovingly, entertainingly, and generously summarized. Not until you read the drab, lifeless work of the likes of General Electric or Transatlantic Reinsurance will you appreciate the sprightly prose of Buffet. One could even imagine a handsome Library of America edition to arise after the Oracle of Omaha’s death. So much has been written already of his wit and wisdom that it would be trite to reproduce it here. If you have not read his essays, I invite you to feast on some rather extraordinary and well written observations. And please don’t imagine that they fit only to business ventures. I’ve always found significant aesthetic instruction in the his famous dictum “let blockheads read what blockheads wrote.” Not since Dr. Johnson has there been a more erudite curmudgeon.
Now if I may fall completely off the rails for a moment, the secret to Buffet’s financial success, I would argue, is exactly what every literary agent and editor looks for in new writers, mastery of voice. Please don’t imagine that Buffet is writing from the heart! On the contrary, a rudimentary literary lesson must be observed: the author is not necessarily the narrator. The Warren Buffet of the Letters is far more folksy, bumbling, and innocent figure, than the actual Warren Buffet could ever be. I mean the letters are downright picaresque! One doesn’t become a Billionaire by being nice for god’s sakes. And here is proof of his literary success: why would the owners of class A shares of Berkshire Hathaway, each averaging more than a hundred thousand dollars in market value, hold for thirty years without a single dividend payment? The very same reason thousands of people awaited the midnight release of Harry Potter and the Order of the Phoenix. Trust in their sweet and sensible author.
There are less important examples from the literary canon of value investing. One need only read Bruce Greenwald’s Value Investing from Graham to Buffet and Beyond (think: Lives of the Saints) or Seth Klarman’s Margin of Safety: Risk Adverse Value Investing Strategies for the Thoughtful Investor to find instances the literary. The latter, I might add, is out of print and fetching the implausible price of nine hundred dollars on Amazon. In terms of market value, that would get you a first edition of Salinger’s Franny and Zooey. (I won’t speak to the intrinsic value.) Of course, the interested reader can find pirated copies on the internet. I’m not saying I’ve pursued such an edition, but to study its pages one is likely to find far more words than numbers, far more meditations than strategies.
As for technical analysis, I have never been able to make heads or tails of their work. All this talk of support, resistance, and trends does not a story make. Value investing attracts the contrarian, the outsider, the skeptic, the misanthrope. It sees the masses as sheepish victims of the market and casts the investor as the hero. Homer was a value investor. Alain Robbe-Grillet did technical analysis.
I don’t want to go too far with this, of course. Strictly speaking, there is no morality in literature, just as there is no morality Wall Street. But if, finally, there is to be an effort to discover the root of evil in Wall Street and money is not going to be an acceptable answer, I suggest that instead you look to the moral other, the humanist, the litterateur, the value investor. To find such a treasure is to detect in a world of machines, the last, slight flicker of human heart.
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