Benjamin Graham (1)Reseñas

Don't know how to rate a book like this: it won't appeal to everyone but it was exactly what I was looking for -- something like "stock investing from first principles". The main text of this book was last updated in 1972, but this edition includes 2003 commentary from Jason Zweig. Helpful to get a long view into how stock and bond markets operates over long periods of time. Lots of the advice (esp bond advice) is US-specific. Main thesis is: don't put money into stocks based on your expectations of future market prices, buy stocks as if you were buying a tiny chunk of the company. When doing so, buy stocks that are obviously underpriced compared to value, because then there's more room for something to go wrong. It's got one or two good fundamental ideas, and then proceeds to apply and unpack those as they apply to various situations. It's mostly well written and pretty engaging.

NF

Explains value investing in detail, with other generic financial concepts about stock markets, securities, market psychology, inflation etc. You'll learn:
• The stock market’s history over 100 years, with key lessons on market psychology, stock price movements, and how to maximize returns over the long run.
• The core principles and concepts of value investing, including: real returns after inflation, the difference between investment and speculation, and why/how to mitigate emotional impulses that could lead to bad investments.
• The 2 main investment pathways (Defensive vs Enterprising), and the strategies/practices associated with each.
• How to analyze securities (stocks, bonds and derivatives) and other investment insights, such as: considerations for other financial tools, engaging professional advice, and dividend policy.

Book summary at: https://readingraphics.com/book-summary-the-intelligent-investor/

People say it is the greatest value investing book of all time. I don't disagree, although I did enjoy Poor Charlie's Almanac slightly more. The book is content-heavy, so I'd recommend watching The Swedish Investor's video summary or finding a detailed summary on reddit.

Benjamin Graham’s last line in The Intelligent Investor sums up the entire book in his trade-mark common-sense way: “ To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.” First published in 1949, this version that I read was re-published in 2005 with a forward written by John Bogle who started Vangard Mutual Fund. Bogle’s forward serves as a very good summary of The Intelligent Investor, highlighting key points clearly. So I found it useful to read the forward again after finishing the book as a quick refresh of its content. Graham’s language may be a bit old fashioned, so some may find his writing style takes a little bit of getting used to. However, once I got my pace of reading going, I find the old fashion style gives me a sense of comfort and assurance – as if a grandfather was sharing all his valuable experience with me. Certainly good things stand the test of time, just as sound values: “Sound investment principles generally produced sound investment results…we must act on the assumption that they would continue to do so.” Graham is very clear form the start that he is not writing for speculators but for the layman who wants to have a sound approach to grow his weath steadily. He believes that lay investors can achieve “a creditable if unspectacular result with a minimum of effort and capability…since anyone – by just buying and holding a representative list – can equal the performance of the market averages…” He warned those who tries to beat the market, as many smart people have tied to do this and failed. How he explained this makes a lot of sense to me - every stock market broker thinks he can outdo the market. That means the stock market experts as a whole is trying to beat itself – a logical contradiction. They just cancel each other out. Thus, one should not rely on a financial advisor who promises the sky and raise your hopes that he can do better that the market average. That, claims Graham, is not possible. “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 form their longer-term increase in value.” Graham chastises average investors for their sloth and ignorance, for willingly giving up their responsibility and rights as business owners to management. This, he feels, is due to the institutionalisation of financial services which has left investors a step removed from ownership. He disagrees with the commonly held view that “If you don’t like the management, sell the stock.” He feels this does nothing to improve bad management, only puts down the price of the stock and shifts the ownership to someone else. “Investors as a whole seem to have abandoned all claim to control over the paid superintendents of their property.” Ultimately, it is important for investors to give themselves a margin of safety by buying a stock at a price that is lower that its appraised value and to diversify the portfolio. These would put the investors in good stead, as against speculators. I like this book. It does not give you many formulas for security analysis (Graham says you can read further in his earlier book Security Analysis). What The Intelligent Investor does is that it lays the foundation for laymen by giving a sound approach to investment, written with common sense and simplicity.

This book provides a lot of information regarding investing in the stock market:
- analyze the long-term value of a stock
- understanding the company and reading the market
- how to deal with IPOs
- indexes are best for beginners (like me)
Accordingly, you get to know when not to invest in a company as well. I'm still very new into this, but the list of checks that we need to do to invest is big and I hope there are at least a couple of companies that pass all these criteria.

As mentioned by others, the examples can be modified to be more relevant and current. Will this generation be able to correlate with what happened in the 70s and 80s?

Also, this is the third book that I've read on this topic and it still had many things that I couldn't comprehend. I had to look online for quite a few things to get a basic understanding before continuing in the book.

Not at all what I expected. I've been investing in index funds and government bonds for decades and I expected Graham to convince me to do otherwise - to show me that it's possible to beat the market. Instead he argues - quite convincingly - that passive investing (what he calls a "defensive portfolio") is what makes most sense unless you're willing to spend several hours a day inspecting companies' fundamentals (and even then there's a good chance that the market will beat you).

Not an entertaining reading though. Graham subjects the reader to long, detailed discussions of stock prices in the US in the late 1960s. There are useful, timeless lessons in those boring discussions but fleshing them out yourself would require a lot of patience. So I'm really thankful to Jason Zweig for his commentary of each chapter. He neatly summarizes Graham's main points and makes them much more digestible for us impatient readers. He also updates Graham's analysis with more recent examples - Enron, the dot-com bubble, etc. And he also provides some systematic evidence to Graham's claims (which are often anecdotal).

If you're considering an audio version, pick the one narrated by Luke Daniels.

Without a doubt Graham and Dodd were wise men and they would still be wise men. That makes this book interesting regardless of age, but it has lost some of its significance. Not because they are wrong but because the things they are pointing out is of much less relevance in a world where fixed income securities are not mainstay investments, and where fixed assets are less important to a company's wellbeing than it used to be.

So what is left? A lot of really wise advice of the general kind (see quotes below). Unfortunately it's embedded in a very thick book and I wouldn't recommend anyone reading the whole book to pick out those advice unless they are really interested in investments, and in particular value investments and if they are, I hope they are already familiar with much of what Graham and Dodd write here. If from no other source, from [b:The Intelligent Investor|106835|The Intelligent Investor (Collins Business Essentials)|Benjamin Graham|https://d.gr-assets.com/books/1409602421s/106835.jpg|102974] by the same authors. That book is much more general and easy to digest.

Some quotes from the book

The most general advice of all:

"The future is often no respecter of statistical data."

About trust in the management (Norwegian Vardia is an ongoing example of this):

"When an enterprise pursues questionable accounting policies, all its securities must be shunned by the investor, no matter how safe or attractive some of them may appear."

About making those really great deals:

"Obviously it requires strength of character in order to think and to act in opposite fashion from the crowd and also patience to wait for opportunities that may be spaced years apart."

About people trying to convince by complicating things. I will paraphrase Warren Buffett - don't invest in something you don't understand:

"Because figures are used in this process, people mistakenly believe that it is “mathematically sound.”"

About trusting advisors absolutely:

"... if the adviser knew whereof he spoke he would not need to bother with a consultant’s duties."

About being using cash as an indicator of success rather than the numbers reported:

"We and other investors today tend to focus on cash flow after capital expenditures (free cash flow), instead of earnings, to evaluate the investment merits of a business. One advantage of this approach is that it helps shortcut a good many games that management can play in reporting profits."

About skepticism towards earning reports:

"The basing of common-stock values on reported per-share earnings has made it much easier for managements to exercise an arbitrary and unwholesome control over the price level of their shares. Whereas it should be emphasized that the overwhelming majority of managements are honest, it must be emphasized also that loose or “purposive” accounting is a highly contagious disease."

One that is very relevant to people tricked into buying stock in the dot com bubble:

"Buying stock in new or virtually new ventures. This we can condemn unhesitatingly and with emphasis. The odds are so strongly against the man who buys into these new flotations that he might as well throw three-quarters of the money out of the window and keep the rest in the bank."

Just read the commentaries after each chapter -- they're much better at describing the concepts than the actual chapters are. As a young, upwardly mobile software developer with more money than I know what to do with, but little love for investing, I found nothing relevant to my interests after chapter 10.

Chatman, Seymour Benjamin (Editor)

Here I have followed the recommendation of Warren Buffett, who claims that this was probably the most important book of his life. I like Ben Graham’s cautious principles rooted in fundamentals, especially his distinction between “investing” and “speculating, his concept of “margin of safety”, and his concept of “Mr. Market” who is an emotional wreck. In case you ever consider investing your money in stocks or bonds, read this first.

The Intelligent Investor serves as a foundation for anyone interested in learning about investing. It is dated but there are universal concepts that remain true today. The revision brings some needed updates with great discussion on the dot com bubble. What I gained from reading this is investor behavior has not changed and there are many speculators in the market. In the current bull market, there is a optimism in companies that Graham would not find financially sound. Many people are seeking the next Amazon or Facebook. The important takeaway is timing the market is less important than finding companies that represent good value with potential growth. This book is not designed to tell the reader what exact stock to buy but instead give perspective on a healthy view on investing.

Intelligent Investor by many is considered to be the best book on value investing that you will ever read. The book is written by Benjamin Graham who was Warren Buffett’s lecturer at Columbia University. Warren Buffett, one of the greatest investors of all time, personally endorses it and says that this is, by far, the best book on investing. He says that stock is an ownership interest in a company and is something completely opposite to speculation, day trading or anything like that.

At the beginning of the book, Graham outlines what he terms as investing as opposed to speculation. Basically, investing is where you aim to preserve the capital and you thoroughly research the shares so that, within a certain extent, guarantee what kind of earnings you’re going to get from that investment. In other words, invest only if you would feel comfortable to hold the stock in the future without seeing the fluctuating prices. That’s the essence of value investing.

Nevertheless, what Graham really highlights, apart from research and a plethora of ratios you should be able to evaluate, is how the psychology and logic of the investor really matter and how to keep your emotions under control. He goes through different types of investors, starting from the defensive investor who is someone a lot more careful. It could be even called the passive investor because he invests and then leaves the wallet allowing it to grow. Next, we have the entrepreneurial investor who is someone willing to and has time to do a lot more research to look for undervalued companies that he can put their money in and watch it grow over time. He also argues that most people should be the defensive investor because the entrepreneurial investor approach does require a lot of time. Too much time for someone who also has a full-time job at the same time as being an investor.

Next, he talks a lot about asset allocation. Generally speaking, it is about diversification of your investments where 75% of your portfolio you should be in stocks as the market is rising and 25% of it in bonds or other fixed-income assets. Of course, 75% to 25% is just approximation. As the market hits its peak (or what you think might be the peak) you should start to sell off your shares and start aiming at bonds which then should represent 75% of your wallet. When the recession hits rock bottom you should repeat the circle and go back to shares. Graham also gives his advice on further diversifications of companies in your wallet, their size and ratios they should present.

Intelligent Investor is a pretty old book and was written 1949 so you could expect some dry and a bit old-fashion language. Nevertheless, it was updated several times and I would recommend the latest version as each chapter was enhanced by comments provided by Jason Zweig. This adds a lot of value because he goes through what Graham is talking about and applies that to modern times and companies. On the other hand, as the book...(if you like to read my full review please visit my blog https://leadersarereaders.blog/the-intelligent-investor/)

The base advice is timeless, though the examples he uses, mostly from the 1940s through early 1970s, are dated. Luckily, Jason Zweig's useful commentary follows each chapter, summarizes the material, provides newer examples, from the late 1990s/early 2000s, and let's the reader know when changes in the industry have made one of Graham's points less relevant. It is a combination that works well. Younger readers, however, might find discussions of Enron and Global Crossing just as opaque as Graham's discussion of railroad bonds, and wish that there was an even newer revision.

The Intelligent Investor, in its last edition by Benjamin Graham, is a book whose acquaintance would have benefited me greatly had I come across it as a young man back when it was published in 1973.

As much a psychological guide to market investing as a technical one, Mr. Graham provides wise and emphatic counsel on when you should be excited to invest (not when euphoric markets reign) and the investments one should seek (not the hottest ones exciting everyone most). He demonstrates how to evaluate companies in order to become the defensive investor he believes most of us should be, with good advice for “enterprising” investors too. It’s a clarifying vision. And helpfully, this vintage volume was updated by Jason Zweig in 2003 with interesting footnotes and commentaries.

The Intelligent Investor also calls our attention to the pitfalls of uncritical belief and the vigilance necessary to avoid them. As an example, he acquaints us with the accounting malpractice employed by some business concerns, something investors can’t afford to ignore. Jason Zweig injects passion into the text when discussing dividends and stock buybacks, aiming scorching words at corporate chiefs who devalue the former practice and too often celebrate the latter.

Direct, intelligent, and even at times entertaining, The Intelligent Investor is a valuable aid for most anyone wishing to learn how to think over, with composure, the issues involved in making better investment decisions.

As one of Warren Buffet's favorite books about investing, this book is certainly worth reading. The book was initially published just after WW II and has been updated regularly for 40 years. With this edition, Jason Zweig continues the revisions updating them to address the market around 2002.

The main thesis for being an intelligent investor is to identify values and to approach investing in a very conservative fashion. it emphasizes this with illustrations of how so many experts have gotten things wrong.

There are two criticisms of the book: (1) It does not really provide enough instruction on how to perform the analysis that Graham insists that investors should perform. Other books are needed for this. (2) The tables in the e-book version are essential to understand the text but those tables are more or less unreadable in the e-book. People wanting to read this book should invest in the paper version.½

I see why this book is so popular and well-respected. However, out of the 20 chapters, there are only 6-8 chapters that I couldn't "must reads." If you want to read about investing, definitely add this to your list, but I recommend that you go to Investopedia to look up some of the terms and concepts. This is a heavy read, so don't rush through it.

A penny saved is a penny earned ... and if invested for 20 years, compounded daily at an average of 6% you'll have $.03 more in your retirement fun ...

Summary of Topics
- Investment vs. Speculation
- Defensive Investment vs. Enterprising Investment
- Decent return for the Defensive: 4%
- Decent return for the Enterprising: 8%
- Investors are owners
- Margin of safety

Reception
A lot of the talking points in this book could easily be given at a talk on Slow Money [the alternative or new economy movement]. And yet what's so striking is that this book is also supposed to be the foundation of modern investment. How could this be, as the two are supposed to be opposites?

Well, most mainstream "investment" is actually speculation. And most Slow Money isn't that radical, but this is changing.

The book lays out two divergent strategies. The first is for the normal "defensive" investor. This strategy is largely passive, and focuses only on minimizing loss; impressive return is ignored.

The second is that of the "enterprising" and aggressive or full-time investor. Here the emphasis is still on minimizing exposure, but returns are expanded by heavily researching all possible pathways.

What's most interesting is not how the concepts of this book apply to investing, but how they apply to life. One of the key points is that, no matter how careful our calculations, some part of every decision is left to chance, and there's no way to eliminate this. So our best option is to align ourselves with those factors of which we will always be ignorant.

Much of the book is about dividends. Apparently they were the primary source of return back then. But it's gotten me thinking: how is it a good deal for a company to perpetually pay investors through dividends? Why not just pay them off? Dividends are essentially just debt service.

Accessible to a non-professional investor, and built on real analysis. Offers a firm foundation for a personal investment strategy and for a healthy, productive attitude towards investments. I would recommend it to everyone.

The Intelligent Investor: The Definitive Book on Value Investing by Benjamin Graham

The father of value investing, Benjamin Graham, wrote a powerful and insight book that has changed the way individuals invest their money. The basic premise in value investing is not to look for the quick changing high payout stocks but rather to focus on long-term investment strategies. This same strategy is the one used by Warren Buffett and look where he, and Berkshire Hathaway clients, is today.

I thought about dabbling in the world of the stock market and thought I needed more education before I sunk my teeth into this world. Enter Benjamin Graham and The Intelligent Investor. This book opened my eyes to a new and valuable understanding of the stock market. It also introduced me to how people can make substantial amounts of money investing correctly. Armed with the right information, any new investor can succeed in the markets.

Graham’s book covers a variety of topics including investment versus speculator; inflation and the investor; the defensive investor; the enterprising investor; market fluctuations; investment funds; and a whole lot of comparisons and valuable information. Nearly 600 pages of valuable information that any stock investor should be aware of.

This books information is dated as it was published in 2003 but the premise is a sound today as it was in 1949 when Graham first published this work. Numerous famous companies provide examples throughout the book to give real world analysis of value investing strategies. Companies like ALCOA, Coca-cola, General Motors, IBM, McGraw-Hill, Penn Central Railroad, Sears Roebuck, Standard Oil of California, Standard Oil of New Jersey, Wal-mart and Yahoo.

I never did invest money into the stock market directly; I decided to go a safer route through mutual funds. There is something inherently risky about the stock market, which did not suit my investment purposes. That is not to say that mutual funds are risk free because they are not. To me, mutual funds are a safer investment vehicle because they rely not on a single stock but rather many different stocks to make up the portfolio.

Anybody interested in value investing should read this book. In fact, I would suggest that anybody contemplating investing any money in any investment vehicle should read this before they invest. I know I am happy to have read this book before making any investments.

Happy Reading,

 

To read #3: The classic book on investing. How valuation should be made in securities investing. The book that made Warren Buffet $40 Billion.

I read it for the 2nd time - the first time I quit it after 100 pages.
Once you are done with this wonderful book on investing, you'll learn that most other literature in the field of value investing seems mimicking what the master has said decades ago.
If you are not from the finance background, initially the book may seem boring or esoteric - as was the case with me. But once you begin to pick up investment basics I'm sure the book will be priceless.
Still I can't claim that I've understood it completely, but then that's why I'll read it for 3rd time, or maybe 100 more times.

I recommend this book for everyone.

A hedge fund manager I know has a great way of describing the difference between growth and value investors: The growth-oriented manager will see a company with a current cash flow level of, say, one dollar and get excited about the possibility it will increase to five dollars in the near future, while the value-oriented manager will get excited if she can buy that dollar now for only fifty cents.

The latter description is a perfect example of the way Graham and Dodd espouse looking at the investment world; the difference between purchase price and intrinsic value is the investor’s “margin of safety”. The writing in this volumen is occasionally ponderous and not all parts of it have aged well since its original publication in 1934—see Graham’s The Intelligent Investor for a more recent treatment of this area—but the book remains “ground zero” for any serious student of stock and bond valuation. It truly deserves to be called a classic.½

A book on investing that every investor should have read. The principles that Benjamin Graham outlines are the very precepts that guided many great investors. Although the book was first published in 1949, and is still very relevant for today's markets. When Benjamin Graham writes about categories of investors, approaches to security analysis, the proper disposition investors should have toward market moves, and other fundamental investment subjects, his advice is timeless. This is a "must-read" even if you are an investor who bases their strategy on technical analysis. Every investor must have a fundamental understanding of how markets interact, and although this book is not easy to read, and takes some discipline to complete, it is time well spent. This book is highly recommended for everyone interested in investing in today's markets.½