The Intelligent Investor by Benjamin Graham

The Intelligent Investor by Benjamin Graham
The Intelligent Investor by Benjamin Graham
The Intelligent Investor by Benjamin Graham was first published in 1949. This book has been acknowledged globally as the greatest investment adviser of the twentieth century and has taught and inspired people worldwide. اضافة اعلان

The Intelligent Investor is based on value investing, an investment approach Graham began teaching at Columbia Business School in 1928 and subsequently refined with David Dodd. This sentiment was echoed by other Graham disciples such as Irving Kahn and Walter Schloss. Warren Buffett read the book at age 20 and began using the value investing taught by Graham to build his own investment portfolio.

Benjamin Graham’s philosophy of “value investing,” which shields investors from making substantial errors, has made this book a stock market must read. In addition to that, Graham helps people to come up with ways to make long term strategies that help them to meet their financial goals.

Over the years, market developments have proven the wisdom of Graham’s strategies. While preserving the integrity of Graham’s original text, this revised edition includes updated commentary by noted financial journalist Jason Zweig, whose perspective incorporates the realities of today’s market, draws parallels between Graham’s examples and today’s financial headlines, and gives readers a more thorough understanding of how to apply Graham’s principles.

According to the author, there are two types of intelligent investors: enterprising investors and defensive investors. Enterprising investors aim to beat the market by discovering and purchasing highly undervalued stocks, while defensive investors settle for matching the market by diversifying.

In order to beat the market, enterprising investors must be smarter and better informed than the vast majority of their competitors. If someone without the requisite skills and knowledge attempts to beat the market average, they’re likely to perform worse than the market average. Thus, the vast majority of us would be wise to settle for the stock market’s approximate 10 percent average annual return.

Investment is also specifically mentioned to be different from trading or speculating. Some may call it “fundamental” investing and what it means is that one must study the company’s fundamentals (financials/management) before selecting it for investment.

Normally the investment would be long term and the only time to sell is if the company’s direction or management does not fit with investor’s requirements anymore. Benjamin Graham also introduces the concept of Margin of Safety. Of course, the writer puts this concept in context of the Great Depression of the 1930s. The idea is that even if a stock looks cheap on paper, you still can get screwed by the irrational Mr Market who prices it lower and lower. So, a stock that looks borderline cheap is not good enough.

Benjamin Graham, who passed away in September 21, 1976, was a British-born American economist, professor, and investor. He is widely known as the “father of value investing” and wrote two of the founding texts in neoclassical investing: Security Analysis (1934) with David Dodd, and The Intelligent Investor (1949). His investment philosophy stressed investor psychology, minimal debt, buy-and-hold investing, fundamental analysis, concentrated diversification, buying within the margin of safety, activist investing, and contrarian mind-sets.

After graduating from Columbia University at age 20, he started his career on Wall Street, eventually founding the Graham-Newman Partnership. After employing his former student Warren Buffett, he took up teaching positions at his alma mater, and later at UCLA Anderson School of Management at the University of California, Los Angeles.

His work in managerial economics and investing has led to a modern wave of value investing within mutual funds, hedge funds, diversified holding companies, and other investment vehicles.

Throughout his career, Graham had many notable disciples who went on to receive substantial success in the world of investment, including Irving Kahn and Warren Buffett, the latter going on to describe him as the second most influential person in his life after his own father.

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