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Investing Lessons From Rereading Benjamin Graham

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As an advisor, I’m always keeping my ears attuned for tidbits which will help me improve. To this end, I have four books on my 2014 reading (or re-reading) list. They are: 

1) The Intelligent Investor by Benjamin Graham, published by Harper Business

2) Graham and Dodd’s Security Analysis, published by McGraw Hill

3) Irrational Exuberance by Robert J. Shiller, published by Broadway Books

4) Manias, Panics, and Crashes by Kindleberger and Aliber, published by Palgrave Macmillian. 

In this post, I’ll make a few comments on the first book, The Intelligent Investor, even though I’m only in the early stages of it. 

When it comes to investing, there’s a great deal of wisdom out there. Hence, there’s no need to reinvent the wheel. In fact, in the forward, written by John Bogle, and the introduction to The Intelligent Investor there’s enough wisdom to let the reader know that this is a book filled with good advice.

Vanguard founder Bogle has certainly been around for a long time, entering the investment world around 1949. Warren Buffett is on record as saying that The Intelligent Investor is “by far the best book on investing ever written.” That speaks volumes by itself. Here are a few of the sage comments I’ve gleaned from the forward and introduction. I have changed the wording slightly, but the essence of each statement remains intact.

  • I do not consider myself to be endowed with brilliance, but pride myself on being careful, conservative, and competent. My primary value is in shielding clients from costly mistakes.
  • I am not a speculator, but an investor. As such, a portfolio’s expected return should be allowed sufficient time to materialize, say a five-year rolling period, longer if greater risk is assumed.
  • I will buy when most people are pessimistic and sell when most people are overly optimistic.
  • Over time, rules which apply to specific security types will change, but those which apply to human nature remain constant.
  • Investors who sell a security at historically high levels will be able to buy them back at substantially lower levels at some later date.
  • (For the Defensive Investor) It’s easier to achieve satisfactory investment results than most people realize. To achieve superior results is harder than it looks.

This is just a sample of the wisdom found in this book. I highly recommend reading it.

Thanks for reading and have a great week!


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