The Intelligent Investor
“By far the best book on investing ever written.” — Warren Buffett
The classic text of Benjamin Graham’s seminal The Intelligent Investor has now been revised and annotated to update the timeless wisdom for today’s market conditions.
The greatest investment advisor of the twentieth century, Benjamin Graham, taught and inspired people worldwide. Graham’s philosophy of “value investing”—which shields investors from substantial error and teaches them to develop long-term strategies—has made The Intelligent Investor the stock market bible ever since its original publication in 1949.
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.
Vital and indispensable, this revised edition of The Intelligent Investor is the most important book you will ever read on how to reach your financial goals.
- HarperCollins e-books; March 2009
- ISBN: 9780060583286
- Title: The Intelligent Investor, Rev. Ed
- Author: Benjamin Graham
- Imprint: HarperCollins e-books
- Language: English
In The Press
“By far the best book on investing ever written.”
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One of the most important and insightful books on investing, and an eternal classic. This is not a book that promises ‘How to become rich…’ or ‘Mastering Stock Market in a week…’ or ‘Beating the market made easy…’ or any shortcut. Three powerful lessons are taught in the book:
– Reduce the risk of irreversible losses
– Increase the likelihood of achieving sustainable gains
– Develop emotional control and behavior to reach the investor’s full potential.
Despite the fact that the book is about investing, investing is a long-term endeavor. A short-term investment is like being a spendthrift miser. A long term investor buys stocks or bonds for their intrinsic value and holds them, while ‘short termers’ play on their price like a video game, high on dopamine, seeking price patterns. The intrinsic value of the security remains constant, but the markets, built upon the greed and fear of speculators, are highly volatile, and this constant flow of price movements is what drives speculation.
An intelligent investor assesses the stock’s value based on some key parameters such as the company’s long-term prospects, management quality, financial strength and capital structure, dividend history, and current dividend.
According to Graham, there are two types of intelligent investors. The active or entrepreneurial investor who continuously monitors, selects, and researches a dynamic mix of stocks, bonds, and mutual funds. Passive investors, on the other hand, create a permanent portfolio that runs on autopilot and requires no further effort (but creates little excitement), argues the author so elegantly. According to investment thinker Charles Ellis, “The enterprising approach is intellectually and physically taxing, while the defensive approach is emotionally demanding.”.
There is no need for the long-term defensive investor who has ample emotional courage not to get distracted by daily price movements to look at the daily price. An investor would be better off if his stocks did not have a market quotation, since he would be spared the mental anguish of others’ mistakes. We don’t check the price of our house every hour! An intelligent investor would take advantage of any opportunity if a good company is facing a temporary crisis and purchase more shares at a lower price. (In cases of extreme exuberance, it is also wise to sell if the price seems too high to be genuine). Adding high quality stock to an investment portfolio regularly would be a prudent investment strategy, thus facilitating ‘dollar cost averaging’. A well-diversified stock and bond portfolio ensures long-term risk management.
In practice, only a small percentage of market participants adhere to the key principles of the book, even though the book is highly acclaimed in investment circles. Thus, situations like the Dot com bubble, the financial crisis of the last decade, and the collapse of high priced so-called ‘high growth stocks’ of unworthy and nefarious companies are common.
A man is known by the books he reads, Ralph Waldo Emerson said. Invest in companies with proven track records, stellar management capabilities, and high standards of corporate citizenship. Investing intelligently is more about ‘character’ than ‘brain’, is the key message of this famous book.