John Neff on Investing

Rating:
Summary: I HAD to write this, sometime after the fact..
Review: .. 'cause John Neff seems like a really neat, down- to- earth guy. Maybe not something that you'd expect from one of the top money managers of this era. Someone who would have giga-buck bets riding- against the popular 'wisdom', of course; yet would take the time to respond to a newbie [me], who wrote that he, too, [ the writer] with his 200- share position could empathise-- and hoped things worked out for the Windsor fund.. Of course, it did. Neff's fund snapped out of a rare contrarian funk [ lagging conventional wisdom for a while] to post a 50-something percent gain that year. There was, of course, not much of a surprise in Mr Neff's posture with regards to go-go, ride 'em cowboy investing [ speculation]. Some things simply don't change, and we are better for it [ that phrase is not original]. This is, perhaps, not the best book ever written; but I found it 98 % valuable and fascinating. Definitely, a keeper.

Rating:
Summary: Nice, not Great
Review: A nice book that shows a sensible investing style.

While the book is full of good decisions, I would have preferred the mention of more of the mistakes that were made, and an analysis of them.

Also, I found that the chronological style was a bit dry. It does not allow for a way to pull the threads together into a mental model. And, finally, the mental model is what is important if one wants to benefit from this book. I think the book imposes on the reader much of the task of building such a model.

Rating:
Summary: Revealing & Insightful
Review: As many have already pointed out; Neff's record speaks for itself. But what his book does is give you an idea of how he achieved his results throughout various economic & political cycles. Most of the book reads like a chronological journal. This gives the reader, and hopefully many new investors, an idea of how much stock valuations, and peoples attitudes towards them, can & do change. For example, in '78 the Windsor fund was valued at 5.6x earnings (an implied earnings yield of 17.9%), with an estimated growth rate of 9.7%, & current yield of 5.5%. More tantalizing is the company specific valutions he writes about. Such valuations sound absurd by todays standards, but after following Neff during his career, hopefully some readers may realize that today valuations may be just as crazy.

Along with some recent market history (the last 30 yrs.), Neff imparts to the reader the importance throughout his career of buying low P/E stocks & always focusing on the price paid for each company.

All in all a very good book & most certainly informative for any investor.

Rating:
Summary: Using a Total Return Strategy to Maximize Returns
Review: Before John Neff retired in 1995, he managed Vanguard's Windsor and Gemini funds for over 30 years. He managed these funds well enough to beat the Standard and Poor's 500 Index over 70% of the time. During his tenure, Vanguard Windsor became the largest mutual fund in America. Neff's account, "John Neff on Investing" contains three distinctive parts. Part One, "My Road to Windsor," is autobiographical in nature.

Part Two, "Enduring Principles," guides the reader through Neff's low price-earnings investing methodology. John Neff lists his main ingredients in picking stocks as a low price-earnings ratio (p/e), a 7% minimum earnings growth rate, a desirable dividend yield, and a favorable "total return ratio." To limit downside risk, Neff considers fundamentally strong companies and industries, and cyclical companies with extremely attractive price-earnings ratios.

John Neff low price-earnings strategy begins with a "total-return ratio" formula. Neff estimates a company's earnings growth rate, adds its dividend yield and divides the total by the stock's price-earnings ratio. Historically, Neff has generally looked for stocks with a "total-return ratio" greater than two. Interested individual investors can access and try John Neff's "total-return ratio" formula, with the option of entering up to five company ticker symbols at a time.

"Neff on Investing" continues in Part Three with "A Market Journal." This chapter chronicles Neff's formidable challenges and remarkable successes in his years at the helm at Vanguard under varying business, economic, and market conditions. Nearly one-third of "Neff on Investing" is devoted to Neff's personal history. Readers who wish to get a full measure of Neff's life - and his investment philosophy, methodology and investing track record may wish to purchase "John Neff on Investing."

Rating:
Summary: Midwestern Investing advice, esp. for Barron's fans
Review: I had read this book over a year ago, when I was first learning about Value Investing as a long-term technique. I first heard of John Neff in a cover story interview by Barron's in the second half of 2002 (I'm not sure when, exactly). He proclaimed in that issue that Citigroup was a once in a lifetime buy in the high $20's / share, and that there were many stocks at attractive values. Well, he turned out to be correct. In subsequent issues of Barron's, his reasons for buying stocks that always seemed to be out of favor at the moment have been consistent with the methodology explained clearly in this book.

"John Neff on Investing" is, in my opinion, a better book about value investing than the venerable "The Intelligent Investor" by Graham. The latter may be a classic and a favorite of Warren Buffett, but I found the former to be an exceptional communication of "Contrarian" investing principles.

I would recommend finding a copy of this book, along with Lynch's "One Up on Wall Street" and O'Neill's "How to Make Money in Stocks" as very readable representations of different approaches one can take to investing in individual stocks.

Rating:
Summary: Feels superficial but . . .
Review: it has something important I haven't seen in other value investing books.

Other value investing books I have seen can give you the detail that you may feel lacking in this book. Certainly the second part of the book where he supposedly elaborates on his technique is rather shallow to the experienced and discerning eye. Do not expect a terribly comprehensive, technical case study approach in this one. It is--as he state--more a conversation.

The third section though is what makes this book intriguing for me. It is something I haven't come across yet and is what redeems this book. Here you have a respected investing master giving a journal like account describing how he applied his investment methodology and the key factors he took note of in the changing environments in which he applied them. Perhaps someone who has intensely studied the stock market the past 30 years may not get much out of it but for someone who hasn't, this offers unique insight on how to deal with all sorts of market conditions. Other books may be more analytical and may give you all sorts of formulas and benchmarks to select stocks but what Neff is giving in this book is his experience as a value investor and I cannot help but feel that is even more valuable. A simple illustration of the value of this is that it gives an actual real account of how long it actually took for his low-PE method to payoff during the early 70s which is a lot more convincing than saying ad nauseum "you have to invest for the long term" without warning that you might have to live for a year or more with a 17% loss and that that is part and parcel of the strategy. He gives his sterling precedent for you to follow, and in his telling, an idea of the pitfalls and ways of dealing with them.

I cannot help but feel that Neff could have communicated this all more clearly or found some way to relate his ideas better--and that is the reason I don't give it 5 stars--but if you are willing to sift through his accounts you'll undoubtedly find a wealth of investing wisdom.

To any who doubt: This book was written in 1999 and towards the end he says that if the growth stocks of the Nasdaq were to stumble, as he thought they would have to, the kinds of things he would be looking at would be REITs, housing stocks, financials, and energy. Boy I wish I had read this sooner and followed his advice! Aside from heathcare and tobacco, he seems to have gotten everything else right. How many of us would have known what to get into? Perhaps even more interesting: how would we have arrived at the answer?

Rating:
Summary: Learn how to profit significantly from Neff!
Review: John Neff on Investing is a must read for any serious investor. I myself have read many MANY investment books written by (or on behalf of) masters such as Buffett, Fisher, Graham, Lynch, etc, but none has been more influential to my own investment style than John Neff.

Like the contrarian himself, Neff's book is somewhat different from the usual. For the most part, it reads like a journal. Although I personally found it extremely practical and enlightening. Most importantly, Neff reveals how a master like himself thinks. By and large Part 2 is the best - I constantly re-read that section over and over again.

Since reading his book, I have profited significantly. Low P/E investing and Total Return Ratio is now the cornerstone of my investment style. Good luck to all!

Rating:
Summary: Learn how to profit significantly from Neff!
Review: John Neff on Investing is a must read for any serious investor. I myself have read many MANY investment books written by (or on behalf of) masters such as Buffett, Fisher, Graham, Lynch, etc, but none has been more influential to my own investment style than John Neff.

Like the contrarian himself, Neff's book is somewhat different from the usual. For the most part, it reads like a journal. Although I personally found it extremely practical and enlightening. Most importantly, Neff reveals how a master like himself thinks. By and large Part 2 is the best - I constantly re-read that section over and over again.

Since reading his book, I have profited significantly. Low P/E investing and Total Return Ratio is now the cornerstone of my investment style. Good luck to all!

Rating:
Summary: Back to basics
Review: John Neff recounts his life as one of Wall Street's legendary value players in this book. This is more of a personal memoir in some ways by one of investing's legends rather than a detailed investment book, but I found it enjoyable and full of useful advice nevetheless. Neff's warnings about the dangers of "story stocks" and momentum stocks, which recent events in the market have certainly underscored, will no doubt ring true to many investors looking to reassess their investment strategies after the recent market downturn. Neff tells how he ferretted out unloved and battered stocks with low PE's whose businesses were still solid and were set to rebound when conditions eventually turned around, which they did sooner than later in Neff's case. Although a little light on the technical details, as I said, it's more of a personal memoir, and overall, it's a good book on the lessons and advantages of value investing and how Neff pursued that strategy in the different economic environments and stock markets of the 60's to the 90's for the Windsor Fund.

Rating:
Summary: Disappointing
Review: Not much insight here. If you enjoy the history of a professional's stock picks, fine......Read it. But otherwise very boring and lacking in explaining Neff's techniques of investment analysis.