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A Modern Approach to Graham and Dodd Investing

A Modern Approach to Graham and Dodd Investing

Thomas P. Au

ISBN: 978-0-471-58415-5

Mar 2004

352 pages

In Stock



An updated approach to classic security analysis
The principles of value investing outlined by Graham and Dodd in the 1940s continues to be used today by individuals and companies who face challenging investment decisions. A Modern Approach to Graham and Dodd Investing examines the classic Graham and Dodd approach to valuation and updates it for the twenty-first century. Thomas Au, a credentialed analyst with a leading insurance company and an ex-Value Line analyst, reworks the basics of value investing from net present value, financial statement analysis, and return on capital to return and leverage, asset allocation, and diversification. Through case studies and real-time analysis, A Modern Approach to Graham and Dodd Investing presents readers with examples that will make analysis and portfolio theory more relevant and powerful.
Thomas P. Au (Hartford, CT) is a Vice President and Portfolio Manager for the investment arm of a large insurance and healthcare provider. His specialty is emerging and international markets. He received his BA, cum laude, with a double major in economics and history, from Yale University, and an MBA in finance from New York University.


PART I Basic Concepts 1

CHAPTER 1 Introduction 3

CHAPTER 2 Investment Evaluations and Strategies 16

PART II Fixed-Income Evaluation 29

CHAPTER 3 Foundation of Fixed Income 31

CHAPTER 4 Fixed-Income Issues of Corporations 47

CHAPTER 5 Distressed Fixed Income 63

PART III Equity Evaluation 79

CHAPTER 6 Cash Flows and Capital Expenditures 81

CHAPTER 7 Analysis of Asset Value 96

CHAPTER 8 Some Observations on the Value of Dividends 112

CHAPTER 9 Some Warnings about the Use of Earnings in Valuation 127

CHAPTER 10 Sales Analysis 143

PART IV Special Vehicles for Investment 157

CHAPTER 11 A Graham and Dodd Approach to Mutual Funds 159

CHAPTER 12 A Graham and Dodd Approach to International Investing 174

CHAPTER 13 A Graham and Dodd View of Real Estate 187

PART V Portfolio Management 203

CHAPTER 14 The Question of Asset Allocation 205

CHAPTER 15 The Concepts of Graham and Dodd versus Modern Theories and Practices 220

CHAPTER 16 Case Studies in Graham and Dodd Investing 234

CHAPTER 17 A Real-Time Experiment 257

PART VI Some Contemporary Issues 271

CHAPTER 18 A Historical View of the Dow and the “Market” 273

CHAPTER 19 Some Disquieting Thoughts on Excessive Credit Creation 292

CHAPTER 20 Generational Cycles in the American Stock Market 306




“A worthwhile read for investors interested in fundamental analysis following along upon the concepts of Benjamin Graham and David Dodd. The author remains true to the general principles and discipline of the two original fundamental investors when evaluating . . . more modern investments. Many readers may find these sections of particular interest. . . Mr. Au has attempted to extrapolate the thinking of two great investment authors of yesteryear. On balance, he has successfully completed the mission.”(Seeking Alpha)