Street Dogs - Something About Whitman

MARTIN Whitman, octogenarian investor and Wall Street legend, agrees that there are problems associated with value investing.

"For a start," he says, "compared to people who stare at charts, value investors have tons of documents to read. It's very labour-intensive. In order to get quality assets on the cheap, the near-term outlook often sucks. "Safe and cheap companies often have low return on equity due to under-utilised assets positioned too conservatively. "Management is often nonpromotional -- people who don't need Wall Street. They don't care.

"Cheap stocks suffer the problems of poor marketability and liquidity. They are subject to the 'roach motel' problem -- easy to check in, but very hard to check out. And, to be safe and cheap, you have to turn down a lot of good stuff that is a little pricey."

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