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by jzachary 6234 days ago
Graham and Buffet engaged in"fundamental analysis", which attemptes to determin an implicit value of a company based on business (accounting/financial) information. The traditional source of this information is from balance sheets, income statements, sales figures, and talking with management.

This is drastically different from "quant analysis", which tries to determine a stock price, or engage in arbitrage, from previous movements, relations to other stocks, and a host of other data largely irrelevant to computing the implicit value of a company. This information comes from real-time data streams from god-knows-where.
3 comments
byrneseyeview 6234 days ago
A fair number of quants use traditional valuation measures. In fact, one of the reasons that by-the-numbers value investing is so hard now is that so many funds are just buying the bottom 10% of companies by price/book, and shorting the top 10%; that compresses the price differences, meaning that value investors have to get more subjective.

To the extent that anybody was a quant back then, Graham probably counted: he did use lots of statistical rules, and he didn't use very much else.

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davidw 6234 days ago
Ok, I'll explain what I mean better:

By looking at certain bits of data, they attempted to find these 'cigar butt' companies - Graham more than Buffett. The way they did that was to comb through a lot of data in a way that can now be done by a computer extremely quickly. So perhaps 'quant' is wrong... shall we say 'data driven'? Of course that's not all Buffet did/does, but it just struck me as an edge that he had then that he couldn't have now.

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sachmanb 6234 days ago
that and buffett has been outspoken against quants. he has also been accused of 'being in the right place at the right time' or 'lucky' quite a few times, but this is not the case.

another good book on buffett which has some sections dedicated to buffett vs quants and buffett vs 'its all luck' ppl is "The making of an American Capitalist" (http://www.amazon.com/Buffett-American-Capitalist-Roger-Lowe...) -- first book I got on him, perhaps the best (got snowball, haven't read it yet).

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byrneseyeview 6234 days ago
The books go well together. "Making of" is way more hagiographic, and less detailed.

What would be really great would be a wikified list of his transactions, linked to the financial statements and news stories that were current at the time.

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