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Value Investing History

 

 

Value investing was developed in the 1920s at Columbia Business School by finance professors Benjamin Graham and David Dodd, MS ’21. The authors of the classic text, Security Analysis, Graham and Dodd were the very pioneers of their field.

Professor Roger Murray and investor Robert Heilbrunn pose with their wives, Agnes Murray and Harriet Heilbrunn.

In the early twentieth century, investors were guided mostly by speculation and insider information. Graham believed, however, that the true value of a stock could be determined through research. He worked with Dodd to develop value investing — a methodology to identify and buy securities priced well below their true value. Graham and Dodd’s security analysis principles provided the first rational basis for investment decisions.

Graham began teaching his reason-based approach at Columbia Business School in 1928. For many years, he continually revised his methodology and his course, which he taught to both Columbia students and Wall Street professionals. The course was subsequently taught by his successor Roger F. Murray, who edited several editions of Security Analysis.

Although the class was temporarily suspended when Murray retired in 1978, value investing was vigorously practiced by generations of investors who had studied with Graham or Murray throughout several decades. Some became legends in investment management, including Warren Buffett MS ’51, Mario Gabelli ’67, Glenn Greenberg ’73, Charles Royce ’63, Walter Schloss, and John Shapiro ’78.

Despite the vast and volatile changes in the economy and securities markets during the last several decades, value investing has proven to be the most successful money management strategy ever developed. Value investors’ success over the second half of the twentieth century proved not only the validity of the value approach, but its preeminence over even the most widely taught and practiced modern investment theory, which was developed in the 1950s and ’60s and remains dominant even today.

In the early ’90s, Columbia Business School reinvigorated the investment management curriculum. At the request of Mario Gabelli, Roger Murray gave a highly successful series of guest lectures, and the Columbia Business School subsequently reintroduced value investing into the finance curriculum. The Robert Heilbrunn Professor of Finance and Asset Management was established, and Executive Education launched a value investing course that is consistently oversubscribed. The school also began the highly successful annual Graham & Dodd Breakfast. Held every fall, the breakfast draws many of the most distinguished figures in the investing profession.

The Heilbrunn Center for Graham & Dodd Investing was established in 2001, ensuring a permanent home for value investing at Columbia Business School. With unmatched access to Wall Street, a renowned finance division, and the resources of the Heilbrunn Center, Columbia Business School offers an unparalleled program in investing. The birthplace of the value approach and security analysis, today the school is educating a new generation of investors.