How to become an intelligent Investor?
Benjamin Graham is famous with the fact that one of the most famous investor, Warren Buffett was taught by him in Columbia business school. So I choose this book to read since I was curious of the figure, Benjamin Graham. The book `Intelligent Investor' deals with the financial concepts such as stock investment, the inflation relates to bond investments and interest rates. Hence, this book was very helpful to understand at not only the investment, but also the sense of finance. I believe that this book indicates that these two concepts are very considerable; `Margin of Safety', and `Uncertainty'. These two concepts were Graham's fundamental concepts.
Benjamin Graham sees the principle of investment of common stock as follow. 1. It's good have diversified investment, minimum 10, maximum 30. 2. Selected stock type should be large-cap stock, have high prospects at performances, and should be a risk based capital. 3. Selected stock type should have a consistency over distributed performances. 4. Should restrict on purchase price over the company's annual average net income per share for past 7 years.
And then, after comparing 4 listed company, above principles' detailed numerical value was shown in follows; 1. Moderate company scale. 2. Strong financial position. 3. At least 20 years of consistently distributed performances. 4. At least for 10 years, more than one-third growth of EPS. 5. Stock prices per share do not go over than 1.5 times of net asset value. 6. Stock prices do not go over more than 15 times of average EPS in recent 3 years.
I read this book throughout the weekend again. I read this book couple of weeks ago one time, and I started re-read this book again. It was kinda hard to understand this book at the first time, however as I read them over, I started to understand a bit better. Honestly, I just do not prefer the individual stock investment, thus I thought how Benjamin Graham's way of selecting stock was very interesting, however I never really thought that I need to change the index investment strategy for that. Instead, the definition of initial investment and speculation, and concept of margin of safety were the part that could be able to apply in anyways of stock investment, hence it was very good chance to refresh the investing mind. Especially, I love to read the chapter 20. It was the description of margin of safety, which explains that to earn profits in stock market; we need to approach with long-term mind while securing the minimum safety margin.
When I read this book through, what I felt first was that I have to put my assets into cash, stock, and real estate while evenly distribute. Every type of assets have their own pros and cons, hence it is always good to have evenly distributed on the different type of assets. In this way, even if the certain market has failed to perform high valuation, the others may not. The second thought about the diversification was I would invest in high, middle, and low risk investment.
In Wall-street, with all that passions, researches, and talents there are a lot of cases losing money. It is actually common to lose. Thus, our goal of investment should be not to earn more than the average, but to earn money that will satisfy my needs. That is, not to win markets, nor to pass the goal faster than some other figure. It is just to reach the goal and pass that finish line though. It doesn't matter how fast nor how slow it may take. To accomplish this important goal, we need to make realistic estimation for the future, and to purchase the stock with the price that can secure enough safety margins. Also through the long-term investment and diversified investment, we need to endeavor to manage the risk of the investment. Additionally, I believe that we can finally become a intelligent investors when we trust and take pluck on our own analysis and investment.
At last, Benjamin Graham mentioned in his book that `If a person sets out to make profits from security purchases and sales, he is embarking on a business venture of his own, which must be run in accordance with accepted business principles if it is to have a chance of success.'
With the four principles that he explained in this book, he explains that `To achieve satisfactory investment result is easier than most people realize; to achieve superior results is harder than it looks.'
Especially in these days, everything change so fast and the trend of yesterday is different with that of today. However, the book `Intelligent Investor' that was written by Benjamin Graham and published in 1949. It is actually very amazing that how the principle of investment that was written in 1949 is still considered as the best investment book in nowadays. It is still a steady seller from the Amazon as well. One of reasons this book is so popular and grabs investors' attention is how this book has focused on the upright investing principles and the attitudes that investors should have, instead saying the methods of stock analysis, nor trading techniques.
I definitely recommend this book to the individual investors. There is another famous book of Benjamin Graham called, `Security Analysis', however this book may be difficult to read for individual investors. I heard this book is more targeted towards the professional analyst. However, this book that I read, `Intelligent Investor' is more likely towards the individual investors. Hence, again I strongly recommend this book to anyone who is hesitating to start reading this book. It may hard to read for the beginners of investment however it should be the must-read book before even starting investment. At the same time, for who is actively performing investors, it is good way to remind the basic principle that must not to be forgotten.
For me, it was great way to refresh the investing mind, and I would love to suggest this book towards my friends as well.
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The Intelligent Investor Rev Ed.: The Definitive Book on Value Investing
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About the author
Classic book for investors
As a retail investor, this book lays out the principles that have been measured by time to ensure long term success.
Top reviews from the United States
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- Reviewed in the United States on November 21, 2012
- Reviewed in the United States on October 18, 2008
- Reviewed in the United States on October 27, 2022
Top reviews from other countries
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Nkeng PaulReviewed in France on February 24, 2021
Fuir la spéculation pour investir intelligemment
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Amazon カスタマーReviewed in Japan on January 30, 2020
装丁が最悪
ハードカバー版を購入しました。Amazon カスタマー装丁が最悪
Reviewed in Japan on January 30, 2020
添付画像の通りガタガタの装丁です。
あえて章ごとに区切ったのか確認しましたが、そうではありませんでした。
非常に残念。
ペーパーバック版にすればよかった。
中身はこれから読みます
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