COMMENTARY ON CHAPTER 15
It is easy in the world to live after the world’s opinion; it is easy
in solitude to live after our own; but the great man is he who in
the midst of the crowd keeps with perfect sweetness the inde-
pendence of solitude.
—Ralph Waldo EmersonPRACTICE, PRACTICE, PRACTICE
Max Heine, founder of the Mutual Series Funds, liked to say that
“there are many roads to Jerusalem.” What this masterly stock picker
meant was that his own value-centered method of selecting stocks
was not the only way to be a successful investor. In this chapter we’ll
look at several techniques that some of today’s leading money man-
agers use for picking stocks.
First, though, it’s worth repeating that for most investors, selecting
individual stocks is unnecessary—if not inadvisable. The fact that most
professionals do a poor job of stock picking does not mean that most
amateurs can do better. The vast majority of people who try to pick
stocks learn that they are not as good at it as they thought; the lucki-
est ones discover this early on, while the less fortunate take years to
learn it. A small percentage of investors can excel at picking their own
stocks. Everyone else would be better off getting help, ideally through
an index fund.
Graham advised investors to practice first, just as even the greatest
athletes and musicians practice and rehearse before every actual per-
formance. He suggested starting off by spending a year tracking and
picking stocks (but notwith real money).^1 In Graham’s day, you would
396(^1) Patricia Dreyfus, “Investment Analysis in Two Easy Lessons” (interview
with Graham), Money,July, 1976, p. 36.