Charlie Munger, now 98, and Warren Buffett, 91, held court at the Berkshire Hathaway annual meeting in Omaha, Nebraska, on April 30. Buffett likes to talk about how he took investment books out of the library and saved his money so that he could buy his first stock when he was 11. He talks about how he studied stock charts and read about other approaches but decided he was on the wrong track after he read a book by the great investor Benjamin Graham.

Graham, regarded as the father of value investing, was a professor at Columbia University, where Buffett attended graduate school. Graham and "Dodd’s Security Analysis" was first published in 1934. It was the bible I had to study while pursuing my MBA (in financial accounting) at NYU in my portfolio management classes. Its principles are still taught decades later to every candidate who wants to become a Chartered Financial Analyst. It was followed in 1949 by "The Intelligent Investor," a more popularized version, which Buffett found to be transformative for evolving his own approach to investing.

Graham’s basic concept was to thoroughly study the company in which you are investing to validate that you are likely to see the return of your capital and earn an adequate return for the risk you are taking. Because he knew stock prices rise and fall, Graham was convinced that, put another way, our goal is to “buy low and sell high.” Buffett has ridden this strategy to become among the richest men in the world through control since 1962 of Berkshire Hathaway, his publicly traded holding company (BRK).

After WWII, many older Americans didn’t really trust the banks (many of which had failed in the Depression) and they trusted stocks even less. In the early 1960s the NYSE was running ads on TV urging investors to “own your own share of American Business.” If you were afraid to buy blue chip stocks and salt them away, many people turned to mutual funds as a savings mechanism. In recent years better tax structures and lower fees have made ETFs (Exchange Traded Funds) more popular alternatives but often they represent the antithesis of what Buffett, Munger and people like me have been trained to do. They track an index so computers just move the gambling chips around without studying the companies and their business plans thoroughly. I was amused at the forthrightness of their comments on Saturday.

Munger called today’s markets “almost a mania of speculation.” “We have computers with algorithms trading against other computers.” “We’ve got people who know nothing about stocks, being advised by stockbrokers who know even less.” Buffett then continued that in the new system in which they don’t charge money to execute stock trades, the brokerages now want to train you to use puts and calls on which the commissions are hefty. “They’ve got the system set up so that if you want to buy a 3-day call you can …They make more money selling calls than if you buy the stock so they teach you calls.” In sharp contrast, Buffett says “our favorite holding period is forever.” He is evaluating a company for the future to decide if he wants to be in business with the management for the long haul. That is what you should be doing. It is just easier for you to exit if you get it wrong than it is for him to sell millions of shares or the whole company if he misjudges.

Patient long-term buy-and-hold investing is the antithesis of buying options. I remain convinced it remains the best way to truly build wealth over time. Buy good companies when nobody else wants them. The best values are often found on the discard pile. Pay a discounted price, not top dollar. Then sit patiently and wait for excellent management to build the future you see possible.

Joan Lappin CFA has been called an “investment guru” by Business Week and a “top manager” by the Wall Street Journal. The Sarasota resident founded Gramercy Capital Management, a registered investment adviser, in 1986. Email JLappincfa@gmail.com. Follow her on twitter: @joanlappin. Her past columns appear at heraldtribune.com/business/columns.

This article originally appeared on Sarasota Herald-Tribune: JOAN LAPPIN: The best stock values are often found on the discard pile