Marty Whitman on Investing

Marty Whitman on Investing

"We were young in our careers and watched very difficult markets in the late 1980s and early 1990s," he says. "That was quite impressionable on us to how we run the business today--never put yourself in a situation where you have to sell something in an environment where you should be buying."

Bruce Flatt, CEO of Brookfield Asset Management, taken from Forbes

The precepts of “safe and cheap” investing, of which Marty is no doubt the master therorist-practioner, sound deceptively simple. Insist on financial strength and honest management (Marty, no utopian, actually gives you some slack on this count: he stipulates “reasonably” honest management). Look for high-quality assets and non-burdensome liabilities. Seek out free cash flows from operations. Look for safety in the price you pay. Put not your trust in forecasts. Invest in what’s in front of you. Don’t shrink from investing in complex securities. Think twice or three times before selling. Strive to understand the financial data under which an investor is fairly buried these days – that is, what the numbers mean, not just what they say...

In looking at a transaction, the single most important question seems to be: What have I got to lose? Only when it seems that risks can be controlled or minimized does the second question come up: How much can I make?

Mr Market Miscalculates,

James Grant