The Enduring Value of Roger Murray. 2022. Paul Johnson and Paul D. Sonkin. Columbia Business School edition.
Who among us does not know the contributions of Benjamin Graham and David Dodd to security analysis, as well as their disciplined approach to long-term investing? After reading and enjoying a lot The Enduring Value of Roger Murray, I now understand that Roger Murray represents a dynamic successor to them in practicing fundamental analysis with an emphasis on discovering the intrinsic value of the stocks in question. This new look at a great investment personality of the last millennium restores confidence in fundamental analysis, and especially in value investing. It also emphasizes how holding one’s convictions in all aspects of work and life can leave a lasting impact beyond one’s own life.
The authors introduce this book in a nice way, introducing the reader to the professional and personal life of Roger Murray and then presenting it in his own voice in four lectures, as well as a 1996 interview of Peter Tanous that took place the year before he died at the age of 86. Both authors have a track record that enhances their work in this investment master’s. Paul Johnson has taught security analysis and value investing at Columbia Business School for over 30 years, and Paul D. Sonkin was a portfolio manager at GAMCO Investors, Inc. from Mario Gabelli, and also served as an adjunct professor at Columbia Business School.
Murray strikes me as a rational thinker who could approach any problem with an open mind. The biographical section of the book highlights this strength during his undergraduate years at Yale, where he won prizes as a young man in literary research and analysis. What drew Murray to business and economics during the Great Depression was marriage. Although he wanted to be a teacher, he realized that he would need a better income to support his family.
Early in his career at Bankers Trust, Murray discovered his passion for investing and his calling to work in investment management. At the age of 39, he was appointed head of the economic and business research department and simultaneously given responsibility for managing institutional portfolios. Murray’s main concern when investing after World War II was that fixed income returns would lag behind the returns he expected for stocks. At this time, fixed income provided the main source of investment returns for both individual and institutional investors.
Murray retired when he left Bankers Trust for Columbia Business School in 1954. His dream of becoming a professor was about to come true, although his job at Columbia was initially administrative. As an adjunct professor, he was able to teach only one class, Advanced Security Analysis, originally taught by Ben Graham, who planned to retire in 1956. With Murray’s extensive experience in investment management , brought a sense of excitement and purpose to every class he taught over two decades at Columbia. After his departure, the school’s excellent value investing program was not actively nurtured until it was re-cultivated in the 1990s with the founding of The Heilbrunn Center for Graham & Dodd Investing.
After 10 years at Columbia Business School, Murray took a sabbatical and began working at TIAA (later along with CREF) as vice president and economist, leading its investment operation. At the time, he noted that university endowment returns lagged behind the rate of growth in operating budgets. As a remedy, Murray invested conservatively in equities with a multi-decade time frame based on his bullish outlook for the US economy.
During his 30 years of investing and teaching, Murray stimulated widespread interest in investing for retirement, not only in pension plans, but also in Keogh plans and IRAs. He helped US Representative Eugene Keogh in his efforts to pass a self-employed retirement plan, and worked to get the IRA into ERISA in 1974. His comprehensive 1968 study of the effects of plans of pensions on savings and investment for the National Bureau of Economic Research (NBER) was an important part of the IRA effort.
Murray’s thinking is impeccably summed up in the four lectures he presented at the Museum of Television and Radio in New York City in early 1993, sponsored by Gabelli Asset Management Company. In these lectures, the reader “hears” his voice, understands his reasoning, and gets a few laughs. Murray addresses numerous topics that emphasize critical issues facing investors, including earning power and its sources, intrinsic value, cash flow versus reported earnings, and valuation inflation . Readers will also enjoy the authors’ notes throughout the lectures; his analysis makes the lectures seem as if they were given recently, not 30 years ago.
In addition to sharp insight into fundamental investments, readers are treated to a special treat as the book begins when they are introduced to Murray’s family. The Murrays were a close-knit, hardworking family that valued education and a strong commitment to productive work. The big surprise for me was meeting her older sister, Grace Hopper, affectionately known as Grandma COBOL. He wrote the industry’s first software compiler in 1952.
My only criticism of this excellent book is that it lacks an index. I was put in the moment when a colleague asked me a specific question about Bruce Greenwald. I also searched unsuccessfully for Murray’s quote: “I’ve got a deal you can’t refuse!”
This excellent tribute to Roger Murray and his enduring value will delight seasoned investment professionals and those just beginning their careers in investment research and management. For more mature professionals, it highlights the importance of carefully considering the price versus intrinsic value of securities in asset management. For the younger student or practitioner, it extols the joy and satisfaction of loving the work and the profession over a long and rich career. For all, it sheds a great light on the evolution of the investment management industry over the past 90 years, and how one luminary contributed so much to it.
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All posts are the opinion of the author. Therefore, they should not be construed as investment advice, nor do the views expressed necessarily reflect the views of the CFA Institute or the author’s employer.
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