Why is The Intelligent Investor so good?
The Intelligent Investor Review
It teaches you some basics about the behavior of the market and it teaches you to be very careful. I learned some key's to determining the value of stocks and to buy stocks with a margin of safety relative to other stocks. I did find that some of my "Value Stocks" weren't all that great.
Even with all the fancy new investing tools and technologies we have today, this book is still considered a must-read for anyone interested in the stock market. It's like the OG of investing books — the original gangster.
Warren Buffett read the book at age 20 and began using the value investing taught by Graham to build his own investment portfolio. The Intelligent Investor also marks a significant deviation in stock selection from Graham's earlier works, such as Security Analysis.
Synopsis. This book will not teach you how to beat the market. However, it will teach you how to reduce risk, protect your capital from loss and reliably generate sustainable returns over the long run. Warren Buffett calls the Intelligent Investor ""by far the best book on investing ever written.
Is The Intelligent Investor Outdated? Even though this book is over 70 years old, it is still relevant. The advice to buy with a margin of safety is just as sound today as it was when Graham was first teaching his philosophy.
High-IQ investors' aggregate stock purchases subsequently outperform low-IQ investors' purchases, particularly in the near future.
Though written in 1934, it remains a valuable resource today. It should be noted, however, that “Security Analysis” is a more technical book than “The Intelligent Investor.” Those unfamiliar with stock evaluation should read “The Intelligent Investor” first and then, if interested, proceed to “Security Analysis.”
Chapter 8 of The Intelligent Investor delves into market fluctuations and the investor's response to them, while Chapter 20 of Ben Graham's classic introduces the indispensable concept of the 'margin of safety. ' Both chapters, according to Buffett, are fundamental to understanding Graham's approach to investing.
The average reader will spend 10 hours and 40 minutes reading this book at 250 WPM (words per minute).
What is Warren Buffett's IQ?
Warren Buffett reportedly has an IQ of over 150 (anything past 140 is considered a genius), and while it has, no doubt, helped him become one of the world's richest men, the lesson here is to value emotional intelligence (EQ) just as highly.
Rather than chasing short-term gains, Buffett focuses on long-term value, identifying companies that, in his view, are undervalued by the market. Furthermore, Buffett's commitment to value investing extends to his philosophy of buying businesses, not just stocks. Buffett is known for his unwavering patience.
The Intelligent Investor by Benjamin Graham is considered by many as the definitive guide to value investing. The book is filled with a wealth of knowledge, but two chapters in particular, Chapter 8 and Chapter 20, provide indispensable insights that any investor, whether seasoned or novice, can benefit from.
The Intelligent Investor Summary
Long-term investing - Graham argues for staying in the market rather than buying and selling stocks. Staying away from trends and crowd pressure - Graham argues for staying away from investing in "group think" or "Mr. Market" pressures.
Benjamin Graham, dubbed the "father of value investing," became famous for his investing style, literary contributions on investing, and research. Graham lectured at his alma mater, Columbia University, and eventually became a professor of finance there.
Warren Buffett is widely considered the greatest investor in the world. Born in 1930 in Omaha, Nebraska, Buffett began investing at a young age and became the chairman and CEO of Berkshire Hathaway, one of the world's largest and most successful investment firms.
The second is a less common 1949 edition, reprinted in 2005, featuring a foreword by John Bogle. Both editions of The Intelligent Investor offer valuable insights, but the revised edition with Zweig's commentary remains the most popular and relevant for contemporary readers.
- The Little Book of Common Sense Investing by Jack Bogle. ...
- A Random Walk Down Wall Street by Burton G. Malkiel. ...
- The Intelligent Investor by Benjamin Graham. ...
- One Up On Wall Street by Peter Lynch. ...
- The Warren Buffett Way by Robert G. Hagstrom.
As in Benjamin Graham's book, The Intelligent Investor, it rarely pays to hold onto a stock that is priced above fair value. Sure there may be different ways that the intelligent investor can value a stock but the end principle is the same – when your stock reaches fair value it's a wise move to sell.
It's a shocking statistic — approximately 90% of retail investors lose money in the stock market over the long run. With the rise of commission-free trading apps like Robinhood, more people than ever are trying their hand at stock picking.
What is a lazy investor?
It's the typical passive investing strategy, for long-term investors, with time horizons of more than 10 years. It's called lazy because you don't actively manage your portfolio. It's the so called buy and hold investing strategy, designed to achieve a long-term financial independence.
A lazy portfolio is an investment strategy that requires little active management. It is typically made up of a mix of low-cost index funds or ETFs that are rebalanced on a regular schedule.
While Warren Buffett himself has never authored a book, many books have been written about his life, his investment strategies, and his philosophies. Some books about Buffett focus more on his life and achievements, while others focus more on replicating his investment style.
The Intelligent Investor remains one of the must-reads, especially for anyone interested in being an active investor or picking stocks. The book contains many concepts we discussed during this post that are important to your future success as an investor.
What I will say is that if you are reading these types of books don't put too much expectation on them building you into a trader, instead look for one or two good points to tuck away for the future. Most trading titles I think attack things from the wrong angle and it's almost always practical.
