Mud and Stars jWarren Buffet calls out this is by far the best book on investing ever writtenrest other testimonials areust reiterations PS Not for tradersPPS Don t forget to read Jason Zweig s commentary after each chapter to get the current context Most of the times those help to understand the original text much better 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 thatAt 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 investingNevertheless 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 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 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 reuire a lot of time Too much time for someone who also has a full time ob 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 ust 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 bookif you like to read my full review please visit my blog Okay this is the book to read if you are serious about investing in stocks Benjamin Graham s value investing method is the time tested choose EM CAREFULLY AND HOLD EM LONG carefully and hold em long strategy
Used By Warren Buffett Benjamin Graham Is by Warren Buffett Benjamin Graham is MAN THAT WARREN BUFFETT CALLS THE that Warren Buffett calls The So you know if you want to be rich like Warren Buffett read this book Of course it s not that easy This book is long dense and dry And even if you read and absorb every page you re still not going to be Warren Buffett But you ll be a lot informed about stock investing Most of it is about how to analyze the actual long term value of a stock which means diving deep into company financial statements Not ust picking one based on a favorable history or because you think you can predict a stock is about to take off because you re sure the company is the next Apple Hey remember in the 80s when Apple seemed all but dead Meanwhile how s that Kodak stock lookingMake no mistake this is not one of those self help How to beat the market books It s pretty much a textbook with graphs and charts and long complicated financial terms that you need to study as seriously as you studied for your college final exams well maybe seriously than that if you re really going to get anything out of it It is not for the dabbler the mildly interested or the can t wrap my head around complicated formulas investorNo no I have not gotten rich like Warren Buffett I didn t buy Apple in the 80s either If you read investing books or magazines you ve undoubtedly heard of Benjamin Graham He s considered the father of value investing and Warren Buffett is one of his disciples In fact The Oracle of Omaha called this book the best book about investing ever writtenI have to disagree with Buffett on this one but that s because I m a very different type of investor than Buffett I m a Boglehead follower of Vanguard founder John Bogle so I invest through broadly diversified passive index funds instead of individual stocks and bonds I read this book to learn Graham s general investing advice and opinion of the market not to learn his formulas for analyzing the values of stocks and bondsMuch of the book s data is understandably stale since it was first published in 1949 You can definitely tell it was written in the pre Internet era of investing before people had easy access to mutual funds ETFs 401ks IRAs and day tradingAlthough the financial world has changed much since his time Graham s fundamentals remain solid For most investors he recommends a diverse portfolio of bonds and stocks held for the long term He strongly advises against trying to time the market and says to never invest in something you don t understand Graham warns against being an emotional investor he says to invest based on arithmetic not optimismTo achieve satisfactory investment results is easier than most people realize to achieve superior results is harder than it looksThe 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 valueNotes. More than one million hardcovers soldNow available for the first time in paperbackThe Classic Text Annotated to Update Graham's Timeless Wisdom for Today's Market ConditionsThe 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 teach.
Free download Ò PDF, DOC, TXT or eBook ↠ Benjamin GrahamY won t go wrong if you want to try and read this thing in its entirety It was ust difficult for me to do so I had high expectations from the book which it failed to meet But then this book is too old to have a lot of relevance nowThe essence is that an intelligent investor is one who doesn t think of this as gambling Do solid fundamental ualitative analysis rather than looking at charts Know what the company stands for And you can t beat the market Maybe if you know nothing about the stock market then this book is for you to get an idea of what you are getting into and what to expect The first 10 chapters were a drag They should ve been 10 pages max with examples This is the content in it s entirety No one can beat the market consistently Dollar cost averaging Invest the same number of dollars in stocks each month This way you buy when cheap and less when expensive You cannot beat the market even if you are an active investor Think long term index funds ualitative analysis over speculation Diversify Look for large companies with dividends Buy cheap sell high and NOT vice versa most people get this wrong purchase of bargain issues invest in closed end fundsCouldn t go through the last 3 4 chapters since I ran out of patience Some notes from chapter 11 16Estimating value of a stockfuture earningsgeneral long term prospectsmanagement in the companyfinancial strength and capital structuredividend recordearning852growth rateEarnings per sharebeware of tricky caveats intended to bump earningslearn how to see fishy stuff in earningsread backwards read read the footnotes of earnings reportThings to look at in a companyProfitabilityStabilityGrowthFinancial PositionDividendsPrice HistorySeven statistical reuirements for inclusion in a defensive investor s portfolio Adeuate size A sufficiently strong financial condition For industrial companies current assets should be at least twice current liabilities a so called two to one current ratio Also long term debt should not exceed the net current assets or working capital For public utilities the debt should not exceed twice the stock euity at book valueContinued dividends for at least the past 20 years No earnings deficit in the past ten years Ten year growth of at least one third in per share earnings Price of stock no than 11 2 times net asset value Price no than 15 times average earnings of the past three years OK the recent stock market drops scared me I got hit by the drops in 99 and said I would never let it happen again This time I had what I thought would be value stocks The problem was I didn t know if I should sell or hold the stocks So for 8 I bought a used copy of Ben Graham s book I stopped reading my other book and read this book like crazy It was the best 8 ever spent 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 tha 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 uick refresh of the book as a uick refresh of contentGraham 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 Ma mre m'a tu - Survivre au gnocide des Tutsis au Rwanda just as sound values Sound investment principles generally produced sound investment resultswe 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 capabilitysince anyone byust buying and holding a representative list can eual 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 ust cancel each other outThus one should not rely on a financial advisor who promises the sky and raise your hopes that he can do better The Market Average That the average That 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 ownershipHe 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 speculatorsI 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 simplicit. Spective incorporates the realities of today's market draws parallels between Graham's examples and today's financial headlines and gives readers a thorough understanding of how to apply Graham's principlesVital and indispensable this HarperBusiness Essentials edition of The Intelligent Investor is the most important book you will ever read on how to reach your financial goal. 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 risk tolerant willing and able to analyze stocks and bonds to find higher returns Defensive portfolio 25 75% US bonds depending on investor s risk tolerance and situation common stocks of leading or prominent US companies blue chips purchased at a reasonable price based on historical data Enterprising portfolio buy low sell high growth stocks value stocks take advantage of special situations like mergers and acuisitions business reorganizations etcYou can t forecast or time the marketUnless you re forced to sell your shares you shouldn t care about share prices Ignore the daily ups and downs of the marketUse dollar cost averaging or formula timing plans to remove the psychological factors of investing Risk vs safetyRisky investments are those that have a chance of declining in price but a history of positive returns You don t care about temporary declines as long as you hold the investment because it s not until you sell that the decline would be realizedUnsafe investments are those with history of poor returns over many years these are not wise investmentsPrices sometimes reflect the present and sometimes reflect the future because you can t tell which it s hard to determine if stocks are fairly priced Margin of safetyMargin of safety is the secret to sound investingThis is a business value over its debt its ability to earn than it needs to cover its expenses or the difference between price and valueGuarantees a better chance of profit than loss not a guaranteed profitDiversification across several stocks increases the certainty of profitThe margin is based on statistical data not speculation Warren Buffett s pick as the greatest investment book of all time and it really does live up to that review Some highlights1 Your main goal should be to not LOSE money so understand the distinction between investing and speculating and understand that most so called investors are actually speculators Minimize the extent to which you are a speculator If you go in trying to get rich uick you ll lose2 To that end trailing PE should be less than 15 and PE PB tangible should be or 2253 But don t buy SIMPLY because the company is cheap look for EPS growth ideally 30% cumulative over the course of the prior 10 years This is a good indicator of a stable and sound business model4 Look for a current ratio current assets current liabilities greater than 2 as a signal the company is financially secure5 Strongly prefer companies with dividends and with consistent dividend growth6 Don t invest in companies that have had negative earnings per share in the last three years7 But Graham s real key is PSYCHOLOGY Market crashes should be thought of as exciting and delightful fire sales on the best stocks By contrast be terrified when the market has gone up far fast and RESIST THE URGE TO START buying stock when the market is up People criticize Graham for advocating market timing but really he advocates a form of dollar cost averaging where one increasingly invests in companies that look objectively undervalued when the market goes down and assuming one doesn t hold forever divests slowly as the market goes up if in one s view one s individual stocks become over valued
does not advocate investing or divesting simply because the market goes down or up one always at individual companiesHe also has very interesting discussions of bonds though I found them less relevant because I don t invest in bonds directly To though I found them less relevant because I don t invest in bonds directly To incidentally Buffett added A know when to break these rules B prefer companies with wide inherent moats his famous example is that if you gave him a billion dollars today he could not create a brand that would compete effectively with Coca Cola C buy private illiuid but outstanding businesses on the cheap eg See s Candies D own and use an insurance company business to create float from premiums that can be used for investing E invest in what you can understand Sadly C and D are not feasible for the rest of us but between Buffett and Graham the small time investor has about all heshe needs in order to at least not get hosed I saw that Benjamin Graham was Buffet s professor at Columbia and one of his closest friends In fact Buffet named one of his kids after Graham The Intelligent Investor teaches the philosophy that Buffet learned at school and went on to find massive success with It does not teach people to ride market waves or speculate Instead it instructs those who follow its teachings to calculate the intrinsic value of companies find the ones that are either under priced or successful but proven to have long term proven success capabilities and then create a portfolio with thoseThe defensive investor does this then puts new money in every month and checks on the ratios of hisher portfolio ever uarter or six months to make sure its still balanced hypothetically lets say 60% stocks 40% bonds this reduces drifting and ensures long term revenue even if it s not the absolute highest one can earn it s still consistent and positive Because their choices were made based on intrinsic value and not market prices these companies are good long term investments and the investor doesnt have to sell and buy new ones constantly It s also suggested to have companies spanning all sectors to reduce risk by diversifying To be honest the commentary and footnotes of this book were useful to me than the original content The book in its original form is obviously outdated in terms of the specific examples it gives for ways to invest and the different companies it details However the commentary by Jason Zweig draws from the fundamental messages behind the book to provide up to date advice on how to invest Undoubtedly Benjamin Graham provided the foundation for the commentary with his book but I personally found Zweig s portions easier to read and relate toI d recommend The Random Walk Guide to Investing Ten Rules for Financial Success for a simpler straight forward alternative to this book It s not that I wouldn t advise anyone to read The Intelligent Investor it s ust that if you don t have the time to plod your way through Graham s outdated details either skip straight to the commentary or check out Malkiel s book You won t go wrong either way and you definitel. Es them to develop long term strategies has made The Intelligent Investor the stock market bible ever since its original publication in 1949Over 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 La Stratgie du camlon journalist Jason Zweig whose per.he does not advocate investing or divesting simply because the market goes down or up one always