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The Investor's Equation, by William Bowen and Frank Ganucheau.    Starting in the 1930s, Benjamin Graham wrote extensively about what has come to be known as "value" investing, and today his principles are broadly accepted throughout the world.  However, it wasn't always this way.  During the 1960s and 1970s many investors, especially those who managed other people's money, turned to "momentum" and "one decision" stocks.  This amounted to rank speculation, instead of a focus on what the authors refer to as the "price paid [relative] to merchandise received."  Amidst the collapse of high price/earnings stocks (sometimes called the "nifty fifty") in the mid 1970s there began a renaissance of value investing.  David Dreman, for example, was one of the first journalists to write about the advantages of low P/E stocks in 1977.  In Bowen and Ganucheau's landmark 1984 book, the authors present a comprehensive explanation of why low P/E investing should work and a detailed proof that, in fact, it does.  Indeed, the studies cited by the authors represent one of the most powerful and convincing bodies of evidence that one is apt to find, even to this day.  Put differently, while everyone has been told to "buy low and sell high," Bowen and Ganucheau make investors' work easier by redefining the popular maxim as "buy low P/Es and sell high P/Es."  Nothing in life, including investing, is quite this simple, but this informative book remains a very valuable one for serious investors.

ISBN: 007134375X
Format: Paperback, 217pp
Pub. Date: July 1998
McGraw Hill School Education Group






"The Investor's Equation is an extraordinary accomplishment; it addresses some of the most troublesome obstacles to investment success, eliminates those impossible of solution, and builds a workable investing system."

Financial Analysts Journal