The Intelligent Investor Summary

Benjamin Graham would be the most popular Investor of the 20th Century if it weren't for his student- Warren Buffett likely individual to outshine him in his investing brilliance.

Having been raised in poverty, he rose to become one of the excellent students at Columbia, and after completing his graduation, he chose to start with investing career with a job on Wall Street.

He penned his investing principle in The Intelligent Investor, and Warren Buffet lauded it by saying the best book on investors has been produced.

Three Crucial Factors that Graham's book assists you in beginning investing:

• Three Principles of Intelligent Investing: These three principles have been beautifully summarized: Analyse for the long term, save yourself from losses and do not get mad for crazy profits.
• Never believe in Mr. Market; that can be irrational in the medium and short term.
• Adhere to strict ideas that you make all your investment and will do good.

Summary

Chapter 1: There are Three Principles to Becoming an Intelligent Investor These are usually called value investing or Intelligent t by Benjamin Graham. These three principles are founded on the following:

• An Intelligent investor carries comprehensively scrutinizes the long-term evolution and management principles of a corporate entity before investing
• They always strive to save from losses through diversification of the business.
• Intelligent Investors are not desperate for glorious profits but emphasize safe and stable returns.

A popular quote from Warren Buffet. Two rules about his investing:

1. Never Lose Money
2. Never Forget to Rule No. 1

It is what intelligent investing is. Nobody can assume the next metaverse, but everyone can save themselves from losses.

With scrutiny, Intelligent Investors would know that stocks with the gap between their current prices and the intrinsic value the company hold and over the period it will unlock. This conclusion has been received from the evidence gathered from observing the entity's history and management principles.

The Intelligent Investor would put money in a few entities to ensure he does not lose everything when things do not turn up according to his wish and then sits back, being glad and accepting 10%, 12%, or 15% a return per annum.

Chapter 2: Never Trust Mr. Market

Graham has tried to explain via analogy where he characterized the entire market into a Single and called him Mr. Market.

What would you do if you thought Mr. Market turned up at your doorstep daily and told you different values for the varied stocks?

Benjamin Graham suggests that the best thing you can do together is avoid him, day in and day out. At some moments, it will seem that the prices are lower, and at some moments, at an astronomical rate.

It is because that Mr. Market is not smart, entirely unpredictable, and known for his complete mood swings.

This can be illustrated with the examples: 30 Days prior, a new iPhone is launched, stock soars, and people queue up in front of the store. It emerged that the latest iPhone did not meet expectations, and the stock fell immediately.

As humans, we have a habit of locating or identifying design, commonalities, and patterns; we are so used to this habit that we assume that even they do not exist. For example, it can lead to false assumptions that the stock price ascends for ten days and will continue to soar indefinitely.

In conclusion, to become a smart investor, believe in your research and avoid believing in market speculation.

Chapter 3: Always Stick to a Strict Formula, and You Will do Fine

At last, to eliminate the emotional stress of investing in the market, you should adhere to a strict formula while investing. Graham has referred to it as Formula investing, but it is popularly said as Dollar Cost Averaging. In Simpler terms, it implies that you configure a fixed budget in that you will put money every month or quarterly and then put money into the stocks you previously chose: at any price.

For example, someone transferred 10% of his monthly income, which was automatically deposited into his investment account. From there, he invest the funds into the stocks that he already possess. This approach can be emotionally taxing, necessitating consistent investments regardless of the fluctuating stock market. However, it is an effective method to safeguard oneself from potential losses that may occur if a significant sum is invested before a market crash.

About the Author: Benjamin Graham

Physicist Sir Isaac Newton is popular for their founding motion and gravity. Similarly, Benjamin Graham is widely appreciated for his book The Intelligent Investor and is renowned as the leading guru for investment and finance. Graham was an influential investor whose work in securities laid the foundation for the deep fundamental valuation applied in stock analysis in the contemporary world by all market participants. He is widely recognized as the father of value investing. The Intelligent Investor: The Definitive Book on Value Investing is one of the notable books on Investment and Finance.

Key Highlights

• Born: 9 May 1894
• Died: 21 September 1976
• He was an English-born researcher and Investor whose research gave a foundation for stock analysis.
• He used to get a profit of $500,00/year at 25, but sadly, he lost his money in the stock market crash 1929.
• He was deeply inspired by the market crash 1929, which led to him authoring a book called Security Analysis.
• He produced The Intelligent Investor: The Definitive Book on Value Investing in 1949, regarded as Investor's Bible.
• He was an instructor at Columbia University, where he mentored and instructed contemporary billionaire investor Warren Buffet.

Graham earned much money in the stock market without taking significant risks by scrutinizing the corporate entities with extreme precision.

Graham contributed to the field by highlighting groupthink and irrationality pervasive in the stock market. Graham believed that investors should think of earning profit from the whims of the stock market rather than participating in it.

Graham used to emphasize that investors focus on the real-life performance of the corporate entity and the profit they receive rather than giving concentration on the changing environment of the market. He is vocal about an investing approach that would give a margin of safety or an area for human error- for the Investor.

Early Life

He was born on 9 May 1894 in London, UK. When he was a toddler, his family shifted to the United States, where all saving vanished in the Bank of Panic 1907. Graham had been to Columbia University on a Scholarship and received a job after graduation on Wall Street with Newburger Henderson and Loeb.

At 25, he was already making a profit of about $ 500,000 per year. He learned some precious lessons from the Stock Market crash in 1929, and all his assets and deposits vanished in the crash. Irving Kahan, one of the greatest American investors, also assisted Graham in his research by providing research content for the book.

Value Investing

Value Investing is deriving the Intrinsic value of a common stock independent of the marker price. The intrinsic value can be calculated using earnings, assets, and dividend payouts and compared to the market value. If the Intrinsic value exceeds the current price, the Investor should purchase and keep it until a mean reversion occurs.

A mean reversion is a theory that over the period, the market price and intrinsic price will converge towards each other until the stock price shows its true value. By Purchasing an undervalued stock, the Investor is paying less and should sell it at the trading price of intrinsic worth.

Published Works

Security Analysis was first produced at the time of the Great Depression in 1934, and at that, Graham was working as a lecturer at the Columbia Business School. His book laid the foundation for Value Investing.

Graham also produced a popular book called The Intelligent Investor: The Definitive Book on Value Investing. The book has been regarded as the Bible of value investing.

Legacy

Warren Buffett is one of the notable disciples of Benjamin Graham, and he was a student at Columbia University. Buffett worked as an employee in Graham's company when he graduated. Under the mentorship of Graham, Warren Buffet has become one of the wealthiest men in the world, worth almost $103 billion. The other notable disciples who studied under him include Walter Schloss, Irving Kahn, and Christopher Browne.

Benjamin Graham ceased in 1976, but his work in Finance and Investing is still used today in the contemporary world.