|
Value Investing: Warren Buffett and the Business Approach
of Investment
Course
Background:
Value investing is an investment paradigm that derives from the ideas on
investment vs. speculation that Benjamin Graham and David Dodd began
teaching at Columbia Business School in 1928 and subsequently developed in
their 1934 book Security Analysis and in Benjamin Graham’s 1949
book The Intelligent Investor. Although
value investing has taken many forms since its inception, it generally
involves buying securities whose shares appear under-priced by some forms of
micro-fundamental analysis.
Benjamin
Graham, with the help of David Dodd, taught Value Investing at Columbia from
1928 to 1956. Roger Murray, following in Ben’s footsteps, taught the class
until 1977. Notable graduates of the program include Warren Buffett, Mario
Gabelli, Leon Cooperman, Chuck Royce, Paul Sonkin and William von Mueffling.
After having been omitted from the curriculum for more than 15 years,
Columbia Business School stared to offer the class of Value Investing again
in 1993.
Although
developments in academic finance in the 1960s and 1970s led to an emphasis
in the curriculum on efficient market theory, recent academic research has
eroded confidence in this hypothesis; these new insights support many of the
original tenets of the Graham and Dodd approach to investing.
The
course extends the core finance curriculum to include the value approach to
company evaluation and investing. It is designed to teach students the
fundamentals of the value approach to investment management originally
developed by Graham and Dodd, and subsequently advanced by Warren Buffett
and Charles Munger. The course will describe the basic structure of the
analytical approach to value investing and its relationship to many of the
elements of the Modern Finance curriculum.
The Logic
of Value Investing:
A New Framework
Introduction: The “Perverse Human Characteristic Puzzle” and the
“Warren Buffett Logic”
Part One: Two Investment Theories and Two Investment
Courses
1.
The Equity Bond Theory
2.
The Float of Premiums Theory
3.
Market Price and Business Valuation
Part
Two: How to Think About Market Prices
1.
Conventional Wisdom: Long on
“Convention”, Short on “Wisdom”
2.
Mr. Market: Greed and Fear
Part
Three: How to Value a Business – Predictable Business and Reliable
Management
1.
Principles of Stock Selections
2.
Predictability: Understandable Business with Competitive Advantage
3.
Thinking Like the Owner
4.
Not Thinking Like the Owner
Part
Four: How to Value a Business—Accounting for Intrinsic Value
1.
Intrinsic Value
2.
Look-Through Earnings
3.
Acquisition Accounting
4.
Corporate Taxation
Part
Five: Investment Strategies
1.
Intelligent Investing
2.
Common Stocks
3.
Arbitrage
4.
Mergers and Acquisitions
5.
Convertible Preferred Stocks
6.
Bonds
7.
Currencies Investing
8.
Futures
9. Options and CDS
Part
Six: Investment and Business Cases
1. Hits and Misses
2. Business Cases
|
