Strategic and Tactical Real Estate Investing Secrets from the Trenches Book

John Neff, a former fund manager of Vanguard’s Windsor Fund, fairly convincingly lays out the merits of "low p/e investing" (or perhaps value investing) in his eponymous book. It consists of three parts: 1) early life biography, 2) investment philosophy, and 3) his investment record. The second part of the book is too superficial and the third part too self-congratulatory. However, his record is undoubtedly very strong and he provides us with another convincing example of the merits of Graham-Dodd-Buffett-like investing. Neff managed the Windsor Fund from 1964 to 1995. During this period, Neff brought the fund average annual returns of 13.7%, outperforming S&P 500's annual 10.6% return. He beat the index in 22 of those 31 years.

His investment philosophy is based on finding good companies with low price-to-earnings ratios. He said that he never bought a stock that was not on sale. He also believed that careful portfolio concentration was necessary to produce alpha. He often bought stocks that were out of favor in the market, sometimes because of bad news or because they were not in "hot" industries. He would, however, sometimes buy into hot industries by investing in suppliers to these industries. He believed in rigorous analysis, spending his weekends rereading the Wall Street Journal papers of the week. His consistency and intellectual honesty in his investing approach make the book a worthwhile read.