Peter Cannell should not be allowed to retire. Over a 50-year career, he has picked up (and shared) a great deal of much-needed wisdom, while earning about 16% per year for clients who have invested with his eponymous firm. That’s rare enough.

Even better, he’s awfully funny, and his biting observations of the foibles of Wall Street will be sorely missed. Who else would devote an entire investor letter to describing the terrible ads being broadcast by the dot-com industry, titled “Dumb.com”?

In that particular May 2000 broadside, he fondly remembers such iconic ads as “Diamonds Are Forever” and “The Pause That Refreshes.” Then he lists 10 “Dreadful Ads,” such as Aether systems’ “PC’s and Laptops Talk Real Big About Business Until We Ask Them to Step Outside.” And, “How Do You Develop a Relationship When Your Business is Business Class?” for XSeeksY.Com.

His point? That some of the dot-com people may be bright but not necessarily intelligent, and that they are not good managers, as is evident from their squandering of shareholders’ money.

In another entertaining piece called “Cooking Lessons,” he takes on the most popular management tricks of the day. These include the overuse of non-expensed stock options (Cisco), excessive debt-financed stock repurchases that boost earnings (IBM), so-called “fond farewells” where disgraced managements are sent packing with ridiculous severance packages (Mattel and Disney), improbable inflation of revenues (Priceline.com), and raiding the pension plan (GE), among others.

These developments may provoke yawns today, but were not so widely recognized in 2000 when the letter was sent to investors. Elsewhere, Mr. Cannell cites a study revealing that managements under pressure tend to use too many adverbs. Adverbs – a warning sign! These missives have been collected into a small book, “Ruminations of a Stock Picker,” which is worth reading.

Mr. Cannell is well read and eclectic, quoting from The Paris Review, Warren Buffett, Alan Greenspan, Gertrude Stein, himself (often), Fortune, Jim Grant, Henry Kaufman (as an inverse indicator), Barton Biggs (ditto), Charles Ellis, and William Butler Yeats.

He founded Peter B. Cannell & Company in 1973. The company is now owned by New York Community Bancorp and manages about $1.1 billion in equities. Though Mr. Cannell retired at the end of last year, the firm’s investment style still reflects his predilection for small capitalization stocks that fly beneath Wall Street’s radar.

He seeks firms which are well managed, have decent balance sheets and good long-term prospects. (Large companies are prone to “hardening of the arteries.”) In other words, Mr. Cannell is a value investor of the old school.

For many years the firm had concentrated holdings in thrift stocks, which he considered undervalued. Even today one of the company’s largest positions (1.3 million shares) is Hudson City Savings Bank (Nasdaq symbol HCBK), which Mr. Cannell describes as “one of the best banks in the country.”

Over the past five years the stock has traded gradually higher, from about $7 per share to the current price of about $33. Over the past year the stock has been flat, despite gradually increasing sales, earnings, and dividends, which now amount to 74 cents a share annually. Only six analysts cover the stock, and they are generally positive.

What is Mr. Cannell investing in today? He likes energy stocks, since he views recent price inflation in the sector to be more than a passing phenomenon. Though he acknowledges that the shortage story has cycled through several times during his career, he is convinced that this time the supply and demand ingredients have permanently shifted to a new plain. And yes, energy stocks may slump in the near term if oil prices weaken.

His interest is focused especially on small coal companies. In America, Mr. Cannell favors Massey Energy (NYSEMEE) which boasts the fourth-largest coal production in the country, and the largest in Appalachia. The company is well positioned to take advantage of fast-gaining demand for metallurgical coal from China and other consuming countries. Revenues increased 15% last year, to $1.46 billion, and are expected to do so again this year. Earnings per share totaled $0.18, compared to a loss in 2003.

The stock has traded higher over the past year, from about $27 to today’s price of $36, but despite significant swings is little changed from five years ago. Analysts are mixed on the stock’s prospects.

How did he get started in the investment game? After graduating from Princeton, Mr. Cannell worked at BBDO, writing copy. He was, he says, “happy as a clam.”

His father-in-law, the late Ferdinand Eberstadt, was a forceful fellow, however, and ultimately persuaded the young Mr. Cannell to join the family firm. Eberstadt has been described by one associate as “a man whose manner is pleasantly abrasive, like a rough towel after a cold shower.”

Mr. Cannell dutifully spent a year in Merrill Lynch’s training program, and then went to work for the Chemical Fund, one of the first mutual funds, which was owned by F. Eberstadt & Company.

In time he became president of the Chemical Fund. One of the seminal moments early in his career was a visit to a company called Haloid. The company eventually changed its name to Xerox, and in ensuing years made a fortune for early investors. According to Mr. Cannell, “he was hooked.”

Mr. Cannell’s style has perhaps gone out of style. However, we need someone around reminding us that “It’s the Valuation, Stupid.” Retirement is a terrible idea. He doesn’t even play golf!