It was Warren Buffett who introduced me to Benjamin Graham for the first time.

Warren Buffett is often credited with popularising the investment philosophy of Benjamin Graham. In fact, Buffett has called Graham’s book “The Intelligent Investor” the best book ever written on investing.

Buffett even studied under Graham at Columbia University and worked for his investment firm before starting his own. Buffett adores Graham.

So, it’s no surprise that many people first hear about Benjamin Graham through Warren Buffett, who is perhaps the most famous and successful investor of our time.

But even without Buffett’s endorsement, Graham’s book stands on its own as a timeless and essential guide for anyone looking to invest wisely.

So back to the book, The Intelligent Investor was first published way back in 1949, and it’s been the go-to guide for investors ever since.

But don’t let the fact that this book was written so long ago fool you. The principles that Graham outlines in this book are just as relevant today as they were back then.

He talks about the importance of investing in companies with solid financials, paying attention to the price you’re paying for a stock, and not getting caught up in the hype of the market.

Graham divides investors into 2 camps: defensive and enterprising:

• The defensive investor is risk-averse, seeking to preserve capital and obtain a reasonable return.

• The enterprising investor is more risk-tolerant, willing and able to analyse stocks and bonds to find higher returns.

Graham emphasises that both approaches can be valid, depending on the investor’s goals, personality, and level of expertise. However, he also notes that the defensive approach is often more appropriate for the majority of investors, as it allows them to avoid the pitfalls of emotional investing and excessive risk-taking.

There are so many lessons from this book, another one I liked is about staying focused on the fundamentals.

Graham emphasises the importance of maintaining a clear-eyed focus on the underlying fundamentals of investing, rather than getting caught up in the noise and hype of the market.

He encourages investors to do their research, stick to their strategies, and avoid making emotional or impulsive decisions.

These are principles that are more important now than ever before.

With all the noise on social media and the constant stream of information coming at us, it’s easy to get caught up in the hype and make some pretty dumb investment decisions.

But if you follow Graham’s advice, you’ll be able to cut through all that noise and make smart, informed decisions. He stresses the importance of doing your research and really understanding the companies you’re investing in.

The Y2K frenzy is a great example of the importance of staying focused on the fundamentals of investing, rather than getting caught up in hype and speculation.

For those who may not be familiar, the Y2K [or Year 2000] problem was a concern that computer systems around the world would malfunction when the year 2000 arrived, due to the fact that many systems had only been programmed to recognise two-digit years [e.g. “99” for 1999].

Some analysts predicted that this could lead to widespread system failures and disruptions, including in the financial markets.

As a result, many investors became anxious and began buying up stocks of companies that were seen as potential beneficiaries of the Y2K scare, such as technology companies and consulting firms.

This led to a speculative bubble in these stocks, with prices soaring to unrealistic levels.

However, as it turned out, the Y2K problem was largely a non-event. Most companies had taken steps to address the issue in advance, and the expected disruptions did not materialise.

Many of the companies that had been hyped up as Y2K beneficiaries ended up performing poorly in the years that followed.

This example highlights the danger of getting caught up in market hype and speculation, rather than staying focused on the fundamentals of investing.

By taking a sober, disciplined approach and sticking to sound investment principles, investors can avoid the pitfalls of hype-driven bubbles and make more informed decisions about where to put their money.

Rating

9/10

This is an important book. It is widely regarded as a classic and essential text for anyone interested in investing.

It has influenced many successful investors over the years, including Warren Buffett, and its principles have stood the test of time.

However, it’s important to note that the book may not be suited for every reader, as its style can be quite technical and detailed, and some of its ideas may be more relevant to certain types of investors than others.

It’s definitely not a page-turner. But if you’re serious about investing, then you need to read this book. It’s like the Bible for investors. I’m not saying the bible is dry 🙂 I’m just saying it’s that important.

Ultimately, readers should approach the book with an open mind, and determine for themselves whether its insights and strategies are relevant and useful to their own investing goals and approach.

I got this book as a gift, and I appreciate it very much. That time and effort of getting it for me were not wasted.

Favourite quotes

• You will be much more in control, if you realise how much you are not in control.
• “The real money in investing will have to be made, as most of it has been in the past, not out of buying and selling, but out of owning and holding securities, receiving interest and dividends, and benefiting from their long-term increase in value.”
• “The investor’s chief problem – and even his worst enemy – is likely to be himself.”
• “In the short run, the market is a voting machine but in the long run, it is a weighing machine.”
• “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right.”
• “The stock investor is neither right or wrong because others agreed or disagreed with him; he is right because his facts and analysis are right.”
• “People who invest make money for themselves; people who speculate make money for their brokers.”
• “An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.”
• “The intelligent investor is a realist who sells to optimists and buys from pessimists.”
• “The best investment you can make is in yourself.”
• “The defensive investor must confine himself to the shares of important companies with a long record of profitable operations in the past.”
• “The stock market is a device for transferring money from the impatient to the patient.”
• “To achieve satisfactory investment results is easier than most people realise; to achieve superior results is harder than it looks.”
• “In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand.”
• “The punches you miss are the ones that wear you out. —Boxing trainer Angelo Dundee”