Leithner Letter No. 69
September 26, 2005

I am aware that many object to the severity of my language; but is there not cause for severity? I will be as harsh as truth, and as uncompromising as justice. On this subject, I do not wish to think, or to speak, or write, with moderation. No! no! Tell a man whose house is on fire to give a moderate alarm; tell him to moderately rescue his wife from the hands of the ravisher; tell the mother to gradually extricate her babe from the fire into which it has fallen – but urge me not to use moderation in a cause like the present.

William Lloyd Garrison
The Liberator (1831)

Shameless Hucksterism

The investment principles and operations of Leithner & Co Pty Ltd owe much to the seminal ideas of Benjamin Graham (1894-1976) and the experiences of his students. Graham’s views about investing are presented in several books; most notably in The Intelligent Investor which was first published in 1949. Graham’s investment principles are straightforward and well-tested, yet they are not widely appreciated and only rarely are they applied in the modern “investment” industry. Of course Chris Leithner understands and applies these principles; moreover, he has been spending his spare time putting them to paper. The resulting book, The Intelligent Australian Investor: Timeless Principles and Fresh Applications was published in August by John Wiley & Sons Australia/Wrightbooks. The similarity of the titles is no coincidence, as Chris’ book is designed to illuminate the foundations of Graham’s enduring principles and apply them to Australian companies. An overview of the book can be obtained by perusing the table of contents listed below:

Part I: Six Foundation Stones

  1. Distinguish investment from speculation
  2. Speculation almost always ends in tears
  3. What is value anyway?
  4. Coping with risk and managing Mr Market
  5. Irrational exuberance revisited: lessons from the Great Bubble
  6. The policy of reasoned scepticism

Part II: Three Scourges

  1. Ignore predictions about market and economic conditions
  2. Reject efficient markets dogma (and the business schools that peddle it)
  3. Beware institutional and bureaucratic imperatives

Part III: Five Blessings

  1. ‘Base rates’ and regression to the mean
  2. Analyse individual businesses, buy only when the price is right, make time your friend
  3. ‘Manage’ risk by balancing competing risks
  4. Constructing and managing portfolios
  5. Learn from the giants who preceded you

Reviews of the book have appeared in The Australian Financial Review (13-14 August) and Queensland’s Courier-Mail (31 August). We sought permission from the publishers to post copies of these articles on our company’s website; however, to no avail. The publishers are concerned that they “would lose control of [their] intellectual property”; consequently, they prefer to say “no” to those of us who knock on their door with cheque-book in hand and offer to pay good money for the right to display a now dated, 500-word piece that is buried in the back pages of last month’s newspaper!

Of course, you are entitled to reach your own judgment about The Intelligent Australian Investor. It can be found on It is also available across the country at good bookstores, including Borders Australia, Wiley & Sons and QBD.

With your support, Chris may displace Harry Potter from the best-sellers list – no doubt Harry is trembling in his boots.

Chris Leithner


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