A Goodbye and Thank you to Irving Kahn

A legend of the value world has passed. Irving Khan passed away at 109. Mr. Kahn was a teach assistant for Graham at Columbia University and worked on both Security Analysis and the Intelligent Investor. When Graham closed his partnership he suggested clients consider taking their accounts to Mr. Kahn who was then at Abrahams and Company a firm eventually purchased by Lehman Brothers. In 1978 he left Lehman and founded his own firm Kahn Brothers. He also wrote a book titled Benjamin Graham, The Father of Financial Analysis that is available on Kindle and is suggested reading.

In a 2014 interview he described his approach thusly ““I prefer to be slow and steady, study companies and think about what they might return over, say, four or five years. If a stock goes down, I have time to weather the storm, maybe buy more at the lower price. If my arguments for the investment haven’t changed, then I should like the stock even more when it goes down.”

In the same interview with UK based Telegraph he added ““During the recent crash and in other sell-offs, Tom and I looked for good companies selling at a discount, which do surface if you’re patient. If the market is overpriced, an investor must be willing to wait. There are always good companies that are overpriced. A disciplined investor avoids them. As Warren Buffett has correctly said, a good investor has the opposite temperament to that prevailing in the market. Throughout all the crashes, sticking to value investing helped me to preserve and grow my capital. Investors must remember that their first job is to preserve their capital. After they’ve dealt with that, they can approach the second job, seeking a return on that capital.”

He also said in the Telegraph piece that ““I would recommend that private investors tune out the prevailing views they hear on the radio, television and the internet. They are not helpful. People say 'buy low, sell high’, but you cannot do this if you are following the herd. You must have the discipline and temperament to resist your impulses. Human beings have precisely the wrong instincts when it comes to the markets. If you recognise this, you can resist the urge to buy into a rally and sell into a decline. It’s also helpful to remember the power of compounding. You don’t need to stretch for returns to grow your capital over the course of your life.”

In 2012 he told Jasn Zweig of th e Wall Journal “Individual investors who avoid "doing things you know too little about" still stand a decent chance of outperforming professional investors, especially by sticking to smaller stocks.” He laos added a quote that my well end up a s a tattoo or throw pillow around Chez Melvin “"If you command a lot of cash you can be wrong and still not have to worry."

In 2008 he told Financial Week that ““There are very few true value investors.Value investing takes discipline, patience and a healthy dose of skepticism. We live in an era with too much confidence in advertising. Everyone tells you that you can attend a seminar for $250 and make lots of money. Value investing means being much more discriminating.”

More Irving Kahn quotes to consider that well help you be a better investor and perhaps even have a better life:

Stop buying things that you don’t need, and start focusing on the essentials; then you will live long and be happy.

You don’t have to be fully invested all the time. Have patience, keep your standards.

Ben always believed in the Socratic approach. He never provided students with a ready answer, believing that through thorough discussions and rational deductions, solid conclusions would be reached. I remember asking him about the word ‘tranche’ as it applied to finance. Instead of providing the definition right way, Ben asked me to look it up in the dictionary. I discovered that it means ‘slice’ in French. Ben believed that if he told me the answer right away, I would forget it, but if I took the initiative to look it up myself, then I would always remember it.

I understand that net-net stocks are not too common anymore, but today’s investors should not complain too much because there were only a handful of industries in which to look for stocks in the old days. Now there are so many different types of businesses in so many different countries that investors can easily find something. Besides, the Internet has made more information available. If you complain that you cannot find opportunities, then that means you either haven’t looked hard enough or you haven’t read broadly enough.

Tim’s hint – Think community banks

Prices are continuously molded by fears, hopes, and unreliable estimates, capital is always at risk unless you buy better than average values.

Why are results so often below average? I believe there are two reasons. First, the institutional client illogically expects security selection to be limited to the major corporations conventionally selected by others. This conventional bias dooms performance to an approximation of the averages…Second, the institutional investors believes he should have his hand held a few times a year to confirm his own reactions to the current scene.

Never buy popular stocks, except maybe in a depression.

I’m a passionate reader. That’s why being an investor is the perfect job for me.

Successful investors, like successful doctors, must have a good understanding of the hard facts expressed in numbers…

If the art of investing were actually easy, or quickly achieved, no one would be in the lower or middle classes.

To be a successful investor learning is essential.

Security prices are as volatile as ocean waves – they range from calm to stormy.

Shrewd investors must resist following the crowd; when everyone is making money these investors know this portends a decline.

Value investing… is one of the best ways to step apart from the crowd and to protect oneself from the unpredictable behavior of the securities markets.

If a company has great prospects everyone already knows about it. We won’t be comfortable paying for good prospects.

People are always worried about the economy and the world, especially since the financial crisis of 2008 and Europe’s sovereign debt crisis in 2011. I feel that people should learn to be optimistic because life goes on, and sometimes favorable surprises come out of the blue, whether due to new policies or scientific breakthroughs.

The world is full of complications, and the media are full of advertising. Stop buying things that you don’t need, and start focusing on the essentials; then you will live long and be happy. In life, the goal is to achieve happiness, so start thinking about the things that count!

Lemmings always lose.

Any market mania comes up against hard reality in the end.

Real investors should never feel bearish because the time to buy value is when markets go down!

I cannot top or add to the wisdom of a legend and one of the founding fathers of value investing. RIP Mr.Kahn and thanks for all the fantastic stock ideas we stole from your SEC filings over the years.

Have great week all. There will be no Thursday update next week as I am off to Baltimore for my daughter’s wedding. I am told there is a lot of stuff I have to do to get ready for the big day. I have no idea what all that stuff is but I am sure that between my daughter, my wife and the groom mom I will have lots of instructions as to how to carry our my various tasks!

Have a great week

Tim

To the great Irving Kahn we can only say https://www.youtube.com/watch?v=UkwY6yI4c2E

Posted to The Tim Melvin Deep Value L… on Feb 26, 2015 — 5:02 PM
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