The Intelligent Investor by BH

Author:BH
Language: eng
Format: epub
Publisher: BH
Published: 2018-07-17T00:00:00+00:00

Introducing the Author

B

enjamin Graham (1894 - 1976) was a well-known economist, professor, and investor. He is called the "father of value investing", having written about and popularized the subject with his two books—Security Analysis published in 1934, and The Intelligent Investor published in 1949. He was born in London and moved to the US with his family when he was a year old. After his father's death, he and his mother experienced poverty. His mother turned their home into a boarding house and traded in stocks with borrowed money. Her earnings were all gone during the 1907 market crash. He was a good student, however, and was able to win a scholarship and finish his college education from Columbia University when he was 20 years old. He excelled in philosophy, mathematics, and English. He started working at Wall Street right after college, preferring it over a teaching career which was offered to him. His Graham-Newman Partnership soon got established after a few years working in Wall Street. He later returned to the academe and taught at Columbia University and at the Anderson School of Management at the UCLA. He taught value investing and managerial economics to his students who eventually became successful in the investment industry. Warren Buffet who managed Berkshire Hathaway and is the third wealthiest American was among his disciples. Other notable students of his include Irving Kahn, William J. Ruane, Walter J. Schloss, and Bert Olden.

Graham mastered stocks by doing diligent research. He survived the Great Crash of 1929 to 1932 and even harvested from the wreckage. From 1936 to his retirement in 1956, his company earned 14.7% yearly, considered "one of the best long-term track records on Wall Street history," according to Zweig. Graham's core investing principles are as important today as they were during his time. He believed that a stock is an actual ownership of a business and that its value is not dependent on its share price. The wise investor knows that the higher he pays for an investment, the lower the return. Graham insists on not overpaying for an investment in order to avoid losing. He teaches patience and confidence and to be a critical thinker, in order to overcome bear markets. How one behaves is more important than how the investments behave. His teachings paved the way for value investing to become popular among investors in hedge funds, mutual funds, diversified holding companies, and other kinds of investments.

Buffet relates that Graham wanted to do "something foolish, something creative, and something generous, "every day. More than anything else, Buffet says, he was a very generous man. As his employer, teacher, and friend, Buffet says Graham was generous with his time, ideas, and spirit. He possessed a clarity of mind that helped Buffet and fellow students during times of needing guidance. He was also generous with his advice and counsel. Buffet agrees with what Walter Lippman said about Graham, that he was one of those men who planted trees in order for other men to sit under them.

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