Review of John Neff on Investing (Hardcover)

Mutual fund managers who can beat the market for a couple of years are a dime a dozen. Mutual fund managers who can beat the market for a couple of decades are practically unheard of. Which is why almost every investor hasheard of John Neff. In his 31 years as a bargain-hunting fund manager, hebeat the market in 22 of them. By the time he retired a few years ago, adollar invested in his Windsor Fund in 1964 would have returned $56, versus$22 for the S&P 500.

In JOHN NEFF ON INVESTING, one of the truemasters of Wall Street tells us exactly how he compiled this amazingrecord. With collaborator Steven Mintz, he explains what kinds of stocks helooked for (in a nutshell, low p/e stocks of companies growing earnings inexcess of 7% annually, often paying a respectable dividend) and a long listof qualifications concerning just what makes one low p/e stock better thananother. (A low p/e company growing too fast is suspect. A dividend yieldisn't always a must. Cyclical stocks should offer lower p/e multiples. Thelist goes on and on.) Just as importantly, Neff shares the wisdom of alifetime in the investment business, outlining the pitfalls that can trapthe unwary investor. (See Chapter 9, CARE AND MAINTENANCE OF A LOW P/EPORTFOLIO.

The meat of Neff's discussion of his investment style isincluded in the middle third of the book. Armed with this advice, aninvestor can easily begin to screen the stock market for companies that fitthe Neff mold. (MSN MoneyCentral Investor, at www.investor.msn.com, offersa powerful and free screening tool. There are many others.)

Elsewhere,Neff devotes the first third of his book to talking about his formativeyears in the investment business prior to taking over the Windsor Fund. Inthe final third of the book, he provides a journal describing hisinvestment activities at the helm of the Windsor Fund. He talks aboutcritical buy-sell decisions, why he made them, and how they worked out ...and also describes the ever-changing market environment in which he wasmaking them. (Reading this book is a great reminder that large-cap growthstocks don't always lead the market, as they have for the past five years.As such, it should help investors be better prepared the next time marketleadership changes.)

If you had the chance to sit down and talk with JohnNeff for a few weeks about his career and his investment style, what youwould get, though likely not so well structured, would be this book. I'dlove to spend those weeks with John Neff. But I wouldn't give up the chanceto have read this book, either. Few investors have achieved more than Neff,and his story deserves a place on any investor's reading list. ###



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