244 InManagersWeTrust
ence. Its approach to finance is the most promising, for it recognizes
the first branch of intelligent investing: Graham’s foundational in-
sight that price and value are different things.
The meaning and measure of value are the second branch, pur-
suits requiring a grasp of basic ideas from the world of accounting.
Accounting has long been known as the language of business, and
the discretion managers have in applying accounting principles re-
quires intelligent investors to become translators of that language.
When that discretion is abused, it is safer to side with those who
declare accounting a state of mind rather than an art or science.
Fluency in accounting gives you a huge investment edge, and even
conversational accounting will put you at the top of the investing
class.
Since market prices and accounting numbers are both fragile
grounds for firm and final investment decisions, the third branch is
managerial trustworthiness. Formal and overly general governance
principles don’t help very much here. What you need are people you
are happy to entrust your wealth with. Identifying them is all art.
In the stoc kmar ket forest, loo kfor these three branches. They
enable you to steer away from the Q culture and thrive in the V
culture, a value-oriented investing culture nurtured by Graham and
Buffett.