The Bible of Value investing – The Intelligent Investor.
The best part of this book is every time I read I get to learn something new without fail.
“By Far the Best book on investing ever written”
The Intelligent Investor was written by none other than the Father of the Value Investing Benjamin Graham. The man who mentored some of the greatest minds in value investing, and who could see something extra in the balance sheet which most failed.
If you really want to start your career in value investing and you area very serious about it then you should start with this one book.
The Book Start with a Very Straight Forward and a Strong Note; asking & answering the question who is Benjamin Graham, why should you listen to him?
“Graham was not only the best investor who ever lived: he was also the greatest practical investor of all time. Before Graham Before Graham, money manager behaved much like a medieval guild, guided largely by superstition, guesswork, and arcane rituals. Graham’s security analysis was the textbook that transformed this musty circle into a modern profession”.
Without taking much time we are going to get into the snippets of The Intelligent Investor
The Intelligent Investor
#1 “To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.” – You don’t have to have high IQ.
#2 It’s not a hidden fact anymore, the more you trade and the less you make. Churning and high portfolio diversification is the key.
#3 “Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.” – Often a wrong decision is taken when stock investment are made looking at other investors.
#4 On diversification – “There should be adequate though not excessive diversification. This might mean a minimum of ten different issues and a maximum of about thirty.”
#5 Staying in control is very important, market conditions and other people’s emotions can easily sway most of the investors. Staying in control is the most important thing.
#6 “Dollar Cost Averaging” – strictly should be followed by “formula investing”. (Page – 29)
#7 As an investor you cannot soundly become “half a businessman” (Page – 176)
#8 Price reversal is given higher importance by Active than Passive long-term investors. (Page – 360)
#9 “The individual investor should act consistently as an investor and not as a speculator” – history has proved again and again the successful wealth creator is an investor and not a speculator.
#10 Knows the price of everything and the value of nothing.
#11 Investor is a realist who sells to optimists and buys from pessimists. (Page – XII)
#12 Being stable at your investment decision is the high importance. How you behave with your investments is more important than how your investments behave with you.
#13 Common stock has done much better than bonds over a long period of time in the past. – (Page – 50)
#14 “Investment is most intelligent when it is most businesslike.” (Page – 523)
#15 “In the short run the market is a voting machine, but in the long run it is a weighing machine.” (pg. 477) The price is more accurate as per the value of the company in the long term than compared in the short term.
#16 “The intelligent investor gets interested in big growth stocks not when they are at their most popular – but when something goes wrong.” (Page – 183)
#17 Investors make money for themselves whereas the speculators make money for their Brokers.
#18 If the net charges of the fees are more than 1% annually then you should start looking out for another broker.
#19 “Never buy a stock because it has gone up or sell one because it has gone down.” (Page 206)
#20 “It has long been the prevalent view that the art of successful investment lies first in the choice of those industries that are most likely to grow in the future and then in identifying the most promising companies in these industries.” – Growth should be Industry related.
#21 “Santayana: “Those who do not remember the past are condemned to repeat it.”
#22 “The work of a financial analyst falls somewhere in the middle between that of a mathematician and of an orator.”
#23 “Perhaps many of the security analysts are handicapped by a flaw in their basic approach to the problem of stock selection. They seek the industries with the best prospects of growth and the companies in these industries with the best management and other advantages. The implication is that they will buy into such industries and such companies at any price, however high, and they will avoid less promising industries and companies no matter how low the price of their shares. This would be the only correct procedure if the earnings of the good companies were sure to grow at a rapid rate indefinitely in the future, for then, in theory, their value would be infinite. And if the less promising companies were headed for extinction, with no salvage, the analysts would be right to consider them unattractive at any price.” – Following high growth rate doesn’t mean to buy the stock at any price.
#24 “A great company is not a great investment if you pay too much for the stock.” (Page – 181)
#25 “The intelligent investor should recognize that market panics can create great prices for good companies and good prices for great companies.” (Page – 482)
#26 “The intelligent investor should recognize that market panics can create great prices for good companies and good prices for great companies.” (Page – 535)
#27 “It should be remembered that a decline of 50% fully offsets a preceding advance of 100%.”
#28 Price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal.
#29 “Nothing important on Wall Street can be counted on to occur exactly in the same way as it happened before.”
#30 “As the Danish philosopher Søren Kierkegaard noted, life can only be understood backwards—but it must be lived forwards.”
#31 “Buy cheap and sell dear.”
#32 “Invest only if you would be comfortable owning a stock even if you had no way of knowing its daily share price”
#33 “Obvious prospects for physical growth in a business do not translate into obvious profits for investors.”
#34 “You’ve got to be careful if you don’t know where you’re going, ’cause you might not get there. —Yogi Berra”
#35 “Successful investing is about managing the risk rather than avoiding it”
You Can Buy the Book – The Intelligent Investor (English) Paperback by Benjamin Graham
Over To You
Reading The Intelligent Investor is going to make you a better investor hands down.
Nothing can get you started better. Even if you are professional we would suggest you read once a year you never know you learn something that changes your life.