Hi All, There’s a huge library of books about value investing, but not much out there about GARP or growth investing. What recommendations do you have about growth investing books? I’ll start: “One Up On Wall Street” by Peter Lynch isn’t a book about growth investing per se, but it’s written by a very successful fund manager that followed a growth-at-reasonable-price (GARP) investment philosophy. Definitely recommended.
I don’t know much about growth books. Damodaran’s take is that the principles are similar to value investing, in that you look for undervalued companies, but that the source of the value is in unrecognized growth. I remember reading in Damodarans stuff that Value outperforms growth on average, but that growth managers tend to outperform their benchmarks more often than value managers do. That suggests that there is a little more opportunity to add value to the investment process under a growth mandate. People clearly overpay for growth on average. It may simply be trying to find the companies that grow without great fanfare. Those are probably the ones further back in the production chain but which supply important growth products.
Fair points – generally agree – now looking for something more grounded, i.e. case studies, specific methodologies or anecdotes, etc. Anyone have book recommendations? Thanks
You won’t get many good recommendations here. There’s only 3 serious value/growth investors on here - me, frank, and bromion. Go to somewhere like cornerofberkshireandfairfax.com to get good responses.
Also, simply there are not that many great growth investors out there, so the selection of literature is likely pretty small. Growth investing is really really hard.
One up on Wall Street is a great book though.
A couple things: First, I’m still looking for book recommendations. Secondly, why presume there are “only three value/growth people” here? Do you work at a fund? Because as a buy sider myself I can definitely tell you there are a number of other buy side guys on this site. Just because we don’t discuss ideas here doesn’t mean we don’t talk about them elsewhere. There are communities that are more amenable to the discussion of ideas and we tend to keep those discussions in those mediums as opposed to this forum. Maybe I don’t understand what you’re meaning here so perhaps you can clarify. I’ve personally met a number of analysts and fund managers from this site and we share ideas regularly, and I respect their insights tremendously. Btw what kind of fund you at? Didn’t realize you were on the buy side.
I am not on the buy side. The better question is, why are you getting inflamed at a comment that wasnt meant as a personal attack on you? Please do enlighten me.
I simply named us three based on what I’ve read on these pages. I do not believe my list was to be taken as canon, nor was I aware that you considered yourself a “serious growth/value investor” as I have not really seen you discuss any investment ideas that might fall into that framework, but I could be wrong. I am sorry if you felt left out.
No mate, I just found your comments as stated a little odd as it sounded like you were saying you were one of three investors on this site. Don’t worry I don’t feel left out but thanks for asking.
Bruce Greenwald’s value investing book and method actually can be applied to growth companies. His big point is that growth has to be faster than the cost of capital, and that lots of investors go wrong because either the growth looks good but can’t surpass this hurdle rate, or because the cost of capital turns out to be higher than expected.
Seems that Peter Lynch is the place to go for anecdotes; however, in an economy where the developed consumer is deleveraging, his anecdotes may not apply nearly as well (one might try to apply them on the short side, though).
Lynch’s observations might work well in major emerging markets, but you’re going to have to have extra insight into local cultural tastes to do it, and while it is possible to do in one or two markets, it is likely to be extra difficult to cover all of them.
Good call on the Greenwald book. I actually haven’t gotten around to reading it yet but perhaps now is the time. Thanks for suggesting.
On a more positive note, Palantir thanks for pointing out the following website (cornerofberkshireandfairfax.com). I don’t browse there too often but there are some good idea discussions. Folks on this forum looking for more focused discussions on specific investing ideas might benefit from that site.
I think Greenwald is still much more focused on value. If I recall correctly, he thinks net book value is awesome, current earnings are nice, and growth is to be taken with a grain of salt. One thing he likes is a sustainable competitive advantage, and he has a specific concept of what this entails which seems smart.
I think there’s a relative lack of specific growth investing books because it’s harder to make a formulaic way to invest in growth, especially considering how it differs widely from one industry to another. Searching on amazon I got stuff like Benjamin Graham on Growth or something like it.
Value is easier for backtesting magic formulas and the like, which look nicer in a book.
For finding growth I think it may be actually better to read a bunch of strategy books instead of investing books - to me it seems that strategy/tendencies is kind of what Lynch looks for on his books, for instance. So maybe read/re-read stuff from Porter/Drucker to try and understand better what makes a company smarter than others.
Random advice loosely related to growth: Good to Great from Jim Collins has some good points (if Apple falls like a rock it will mean Steve Jobs wasn’t a Level 5 leader).
Adventurer Capitalist by Jim Rogers is a half travel, half finance book, but his ideas are very interesting if you’re into top-down global investing.
For marketing knowledge Kotler is viewed as the top dog, but Ries and Trout have interesting quick reads (although they oversimplify stuff).
Superb suggestion. “Competitive Strategy” by Michael Porter is one of my favorite books of all time, and one of my most highly recommended books as it relates to growth investing. Sure, it’s not focused on growth investing but a lot fo the concepts can be applied and I use it all the time in investing all kinds of investment opportunities.
I think Crazyman is right that Greenwald is mostly about traditional value investing. My point was that he actually has something to say about growth that can be applied usefully to growth investing, even if that’s not where he himself prefers to spend his time.
I think Crazyman also has a good point that identifying growth is probably more about the intaraction of global-macro type trends (technology changes, demographic and consumption changes, relative prices) and business strategy decisions. These are the kinds of things that drive growth.
Good points, Crazyman! Feliz Natal!
You guys are so nice! Happy Holidays/Boas Festas to all!!!
I’m currently reading Investment Biker. How would you compare it to Adventurer Capitalist? Worth reading both?
I think so. I actually read them in reverse order and maybe because of it I enjoyed adventurer capitalist a little better.
Adventurer Capitalist is about Roger’s travellings around 99-2002, so even though it’s still a long while ago the information he gaves is a little more current. His overall ideas are more or less the same, but it’s interesting to see his thought process applied to different countries, situations and such. And today we can see for the most part which of his predictions panned out.
I also find the non-finance part of those books awesome, so if you like it n Investment Biker you’ll probably like the other one as well. He travels through different routes and actually visits more countries if I recall correctly. Those are pretty good books to fire you up for a vacation.
I think the second book has a bigger focus on Africa, which I’m very interested in for possible long term investing.
In a way it’s more of the same, but that’s not a bad thing.
YouTubing Jim Rogers shows some pretty interesting stuff too, even though his views seem a little scary or too forward sometimes. Paraphrasing, “Put all your money into Myanmar” or “North and South Korea will become one in 5 years” are pretty strong statements: http://www.youtube.com/watch?v=3G57H-IVE84&list=UUrYg9KVxWlj3KpXMgel7w0A&index=5
Not sure why no one has mentioned it yet, but I consider “Common Stocks and Uncommon Profits” a growth investing book.
^ Thanks for your suggestion Zuran. I actually have a copy sitting on my shelf that I hadn’t ever gotten around to reading. Fisher is to growth investing what Graham and Buffett are to value investing, or something like that.
I’m new to “growth” myself but as I’ve started to look at some growth names because of my work responsibilities, I’ve been looking for books to complement my existing large library of value books. Therefore I’ve had some titles sitting around forever, but never had the time to think twice about them. From what I’ve heard, Common Stocks and Uncommon Profits is a cornerstone text anyway, i.e. the type of thing anybody should read. What motivated you to look into that book in the first place and what have you found most valuable about it?
Merry Christmas!
Growth Stock Investing Books:
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How to Make Money in Stocks by Willam O’Neil
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Common Stocks and Uncommon Profits by Phil Fisher
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The Big Money by Fredrick R. Kobrick
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Benjamin Graham and the Power of Growth Stocks by Fredrick Martin CFA
Warrenb1
Just want to reiterate Peter Lynch. The dude is tits.
“Don’t invest in a company when you can’t draw what they do with a crayon.”