The Lasting Worth of Roger Murray: A Book Review

Who knows David Dodd and Benjamin Graham’s contributions to securities analysis and their systematic approach to lengthy investing? I now see that Roger Murray offers a dynamic alternative to them in fundamental analysis practice, emphasizing revealing the intrinsic worth of the stock in question after reading and heartily appreciating The Lasting Value of Roger Murray. One’s faith in fundamental research, particularly value investing, is restored by this new look at a legendary investor from the previous millennium. It also emphasizes how standing by one’s principles in all facets of business and life may have an influence that endures well beyond one’s lifespan.

The writers deliver this book in a friendly manner, giving the reader an overview of Roger Murray’s career and personal life before introducing him in four lectures and an interview with Peter Tanous from 1996, the year before he passed away at the age of 86. The backgrounds of both writers have benefited their work on this investing master. Paul D. Sonkin was a portfolio manager for Mario Gabelli’s GAMCO Investors, Inc., and was an associate professor at Columbia Management School. Paul Johnson has over 30 years of experience teaching security analysis and values investing at the business school.

Murray is a logical thinker who can tackle any issue with an open mind. The book’s biographical portion focuses on this strength from his college years at Yale when he won prizes for literary investigation and analysis at a young age. Murray’s marriage led him to economics and business during the Great Depression. Despite his desire to work as a teacher, he understood that to provide for his family, he would need to earn more money.

Murray found his love for investing and calling to work in investment management early in his profession at Bankers Trust. At 39, he was appointed the department’s chief of economic and business research and oversaw institutional portfolios. While making investments after World War II, Murray’s main worry was that the returns on a fixed income would be lower than those he expected from equities. At this time, fixed income served as private and institutional investors’ primary source of investment return.

When Murray left Bankers Trust in 1954 to attend Columbia Management School, he effectively retired. Although his employment at Columbia had initially been administrative, his ambition of becoming a professor would soon come true. The only course he was permitted to teach as an adjunct professor was Advanced Security Analysis, initially conducted by Ben Graham, who intended to retire in 1956. Murray’s 20 years of teaching at Columbia were filled with enthusiasm and a sense of purpose because of his significant expertise in investment management. The excellent value investing program at the university was not actively maintained after he left until it was revived in the 1990s with the establishment of the Heilbrunn Center of Graham & Dodd Investment.

Following ten years at Columbia Management School, Murray took a break and started working as a VP and economist, heading the investment business at TIAA (later together with CREF). He observed at the time that operating budget growth trailed behind the profits from college endowments. Murray’s cautious equity investments were made with a multi-decade time horizon and a bright forecast for the US economy.

Murray sparked significant interest in retirement investment during his thirty years in investing and teaching, not just in retirement plans but also in Keogh and IRA plans. He campaigned to include the IRA in the 1974 ERISA and supported US Congressman Eugene Keogh in his efforts to enact a retirement program for independent contractors. A significant contribution to the IRA effort was his 1968 thorough research of the impact of pension plans on saving and investing for the National Bureau of Economic Research (NBER).

Murray’s four lectures at the Museum of Television and Radio in New York City in early 1993, which Gabelli Asset Management Corporation sponsored, are an excellent summary of his ideas. The reader “hears” his voice in these lectures, comprehends his logic, and laughs out loud a few times. Murray discusses a wide range of subjects that highlight significant problems that investors must deal with, such as earning power and its suppliers, intrinsic value, cash flow vs. reported earnings, and hyperinflation in valuation. Readers will especially appreciate the Authors’ Notes, which provide insight that makes the lectures appear like they were delivered lately rather than thirty years ago.

Readers get an additional pleasure as they’re introduced to Murray’s family at the beginning of the book, in addition to sharp insights on fundamental investment. The Murrays were a close-knit, hard-working family that excelled academically and was dedicated to doing good work. I was most surprised to read about Grace Hopper, his older sister, who was affectionately called Grandmother COBOL. In 1952, she created the first software compiler used by the industry.
The absence of an index is the only drawback to this superb book. I was forced to answer when a coworker pressed me with a particular query regarding Bruce Greenwald. I also tried to dig up Murray’s famous words, “I’ve got a bargain you can’t refuse,” but was unsuccessful.