- Publisher: Harper Business; Latest edition (1 January 2003)
- Language: English
- ISBN-10: 9780062312686
- ISBN-13: 978-0062312686
- ASIN: 0062312685
- Product Dimensions: 20 x 14 x 4 cm
- Customer Reviews: 6,692 customer ratings
- Amazon Bestsellers Rank: #83 in Books (See Top 100 in Books)
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The Intelligent Investor (English) Paperback – 2013 Paperback – 1 January 2003
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Over the years, market developments have proven the wisdom of Graham's strategies. While preserving the integrity of Graham's original text, this revised edition includes updated commentary by noted financial journalist Jason Zweig, whose perspective incorporates the realities of today's market, draws parallels between Graham's examples and today's financial headlines, and gives readers a more thorough understanding of how to apply Graham's principles.
Vital and indispensable, this HarperBusiness Essentials edition of The Intelligent Investor is the most important book you will ever read on how to reach your financial goals.
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*Book: "You either get the idea in the first five minutes, or you don't get it at all", said Warren Buffet in the epilogue.
- I would add - you don't necessarily need to read all 550 pages, but you must read through the idea of value investing - and it will change your way of looking at the world.
- I always felt confused and amazed by listening to all the ridiculous fuzz that comes from the Wall Street through TV and the internet. The book explains why.
🔴Several rules I noted into my keep:
፨ - Investor buys the business [based on its price/value], speculator buys the stock [based on an absurd believe that he can foresee where the stock price will go].
፨ - The best way to earn adequate return without any trouble whatsoever is to invest into cheap (low maintenance cost) indexes; use dollar averaging (buy every month instead of once at a random point of time) for smoothing the luck involved.
፨ - For enterprising investor (willing to spend much more time), look for a diversified list of bargain issues (at least 30 issues, business values (i.e. net current asset and other related metrics) is below market cap)
፨ - During the bubble, hot industries and companies are getting overpriced. That could only be financed from somewhere. Partially that money are coming from well established old economy companies that lose the appeal. Thus, invest in such old economy companies while bubble grows, as soon as the bubble burst - undervalued companies would rise back.
፨ - Don't ever buy IPOs! (See chapter for compelling arguments)
፨ - Don't consider companies that do not pay dividends. Dividends - money firm pays you for providing capital, they belong to you. They cut a piece for reinvestment - payout ratio. If firm doesn't pay dividends - invest all into growth so you could profit later - that's a speculation. Moreover stock price would be more volatile because it should now rely on future rather than current prospects.
The Intelligent Investor, by Benjamin Graham, is probably the most important and influential value investing book ever written even Warren Buffet described it as “by far the best book ever written on investing”.
፨ If you could only buy one investment book in your lifetime, this would probably be the one.
፨ It had been 6 months since I last read The Intelligent Investor. I have enjoyed my personal “refresher course” in value investing.
🔴Objective of The Intelligent Investor Book
፨ Benjamin Graham’s objective was to provide an investment policy book for the ordinary investor.
፨ He succeeded in putting seemingly hard concepts into terms that could be understood and, more importantly, implemented by the average investor.
፨ The typical investor has a tendency to “follow the market” when they should be employing portfolio risk management strategies. Instead, Graham gives us an alternative based on fundamental stock analysis.
፨ The goal is to learn how to avoid the pitfalls of allowing our emotions to control our investment decisions. Rather, Graham provides the foundation for making businesslike decisions.
🔴The Intelligent Investor puts special emphasis on teaching:
1. Risk management through asset allocation and diversification.
2. Maximizing probabilities through valuations analysis and margin of safety.
3. A disciplined approach that will prevent consequential errors to a portfolio.
🔴If you have any Doubt regarding this Review or this Product, then Feel Free to Contact me or Just ask me by commenting below.I Hope this Review was Helpful.Write reviews, help others, happy shopping.
Thank You for Reading this Review.
-●➽ʙʜᴀᴠᴇsʜ ʙ.ᴏ.ᴛ 🔥
- minimize the odds of suffering irreversible losses
- maximize the chance of achieving sustainable gains
- practice emotional control and behavior to help the investor achieve full potential.
The book is about investing and having said that, investing is for the long term. Short term investing is like saying one is a spendthrift miser. While long term investors buy stocks or bonds for its intrinsic value and hold them, the 'short termers' play on its price like a video game, high on dopamine, ‘seeing price patterns’. While the intrinsic value of the security is stable, the markets, built upon the greed and fear of speculators, fluctuate widely and it is this constant flow of price movements that is the juice of speculation.
The intelligent investor is the one who estimates the value of a stock based on some key parameters like the company’s long-term prospects, quality of management, financial strength and capital structure, dividend record, and current dividend.
Graham lists two types of intelligent investors. The ‘active’ or ‘enterprising’ who does continuous researching, selecting and monitoring a dynamic mix of stocks, bonds and mutual funds. The ‘passive’ or ‘defensive’ investor on the other hand, creates a permanent portfolio that runs on autopilot and requires no further effort (but generates very little excitement) argues the author so elegantly. Quoting the investment thinker Charles Ellis, ‘’the enterprising approach is physically and intellectually taxing, while the defensive approach is emotionally demanding’’.
For the long-term defensive investor, who has abundant emotional courage not to be distracted by daily price movements, there is no need to look at the daily price. In fact, the investor ‘’would be better off if his stocks had no market quotation at all, for he would be spared the mental anguish caused by other persons’ mistakes of judgement.’’ We don’t check the price of our house every hour! The intelligent investor would make use of any opportunity if a good company is facing a temporary crisis and add more shares to his portfolio at lower price. (In cases of extreme exuberance, it is also wise to sell if the price seems too high to be real). A prudent investment methodology would be to add on more of high quality stocks on a regular basis, thus paving way for ‘dollar cost averaging’. A well-diversified stock and bond portfolio ensures long term risk mitigation.
Though the book is highly acclaimed in investment circles, in practice, only a miniscule of market participants adhere to the key principles the world over. Hence, situations like the Dot com bubble, the financial crisis of the last decade and the collapse of high priced so called ‘high growth stocks’ of unworthy and nefarious companies happen repeatedly.
‘’A man is known by the books he reads” said Ralph Waldo Emerson. Invest in companies that have proven track record, stellar management capabilities and high ethical standards of corporate citizenry. Being an intelligent investor is more a matter of ‘character’ than ‘brain’, is the key message of this great tome.
Printing, font size, paper quality all of this book is very good.
It took me longest time to complete the book since the book is quite length.
It is a must buy if you are into investing since it teaches how to mitigate risk in investing.
Sometimes the book is just about numbers and facts which could be little boring as all the reference are from U.S. companies and of their investors.
You can complete reading this book only if you keep patience and have interest in investing else this would be lying in your bookshelf as another good but uncompleted book.
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Top international reviews
I made the first attempt to read this book 2 years ago but had failed. At that time, I knew little about the stock market, the economy, how businesses work. Much of the text made no sense to me and I had eventually given up after 4 chapters. However, after getting educated by the good folks on YouTube, I was able to give this book another try. Granted, it was still very challenging, but the value that I received from it was far greater than the literary hardship I endured.
This is not a book that will get your blood to boil with excitement; it does not have tactics that offer promises of "do this and get rich". If you are here for that reason, this is not the book for you. It however, guides you to approach the art of investment with the right attitude to stock prices, fluctuations, portfolio and risk. This book provides the readers immense investment experience with an attempt to shape an aspiring investor like myself with a proper mindset.
Mr. Zweig's commentary after each chapter are mostly helpful. There are instances that I had finished a chapter without getting much of it. The commentary then explains what Mr. Graham really meant in an easy-to-understand way. However, I did find the comparisons of different companies in one of the commentaries to be quite repeated. Most of the examples from the commentary were drawn from the dot com bubble and therefore the comparisons had rather predictable endings. Though it is still valuable to witness second hand at how bad things became when it burst.
On the literary side, the language employed was slightly historical. Many sentences required me to re-read in order to understand. I think this is a good way to practise patience, as information is so easily accessible in today's world. I also got to learn a few new words from the text.
There are a lot of online commentaries on this book, as it has become almost "biblical" in value investing. I recommend the readers to use these commentaries to get a modern view of Mr. Graham's concepts.
I began this book thinking I might have a side hobby of picking individual stocks as a side hobby. This book dispelled me of the glamour of that notion. As Benjamin Graham himself notes, a passive investor (someone who invests to at least match the average return of the stock market) can enoy success with a minimum of time while an enterprising investor (someone who works to "beat" the stock market) would only have a reasonable chance of success after doing lots of work as analysis and also having the necessary intellectual aptitude. Being an enterprising investor isn't for me because I can't dedicate the time to adequately research companies as he teaches in his book. I suspect that my situation would be the same as 99% of other people who want to invest their money.
What the book did most effectively for me is resolve my latent Dunning-Kruger effect where I imagined I could beat the intelligent people of Wall Street at their own game. I found the chapter commentaries by Jason Zweig to be especially helpful at highlighting amateur speculators who jumped into hot trends like dot com companies right before the industry collapsed. Both Jason and Ben work painstakingly to illustrate how hard it is to do the work of properly evaluating a company and establishing its true value vs its current price on the stock market or its book value (the balance of how much the companies assets are worth after already accounting for debts and liabilities).
The book helped me become literate about the different forms of investments available to me and the merits and handicaps of each. Bonds, Preferred Stocks, ETF's and Treasury Bills meant nothing to me before reading the book. Now I have a fair enough grasp of all investment tools to know what I'm getting into if I should ever choose to invest. The book is a long read as it goes through the in depth process of educating a lay person like myself but it does its job well. In that sense the book has aged marvelously with the help of modern commentary by Jason Zweig.
One drawback for me is that at various points Graham and Zweig tried to discuss how to address tax on capital income best but the advice was only relevant to an American. As a Canadian, I skipped those chapters and I had to research for myself about best reducing the taxable amount on my investment gains. Canadians might find a similar book written by a Canadian to be a better choice. Better yet, read both and be even more well prepared for investing on your own.
In the end, I decided that a balanced portfolio of ETF's tracking stocks and Canadian bonds. Being able to buy these on my own, without being hand held by a broker means that this book will probably already be saving me hundreds of dollars by the end of the year in management fees. Trust me, this book will pay for itself many times with sensible and sober advice.
In the future, I might do some angel investing for small start ups that I'm familiar with or other non-publicly traded investment opportunities. I'll only be doing that after reading many other books of the same caliber as this one. Even then, I'll be considering Graham's sagely advice to invest based on my careful assessment of what a company is actually worth, or in his words to “invest only if you would be comfortable owning a stock even if you had no way of knowing its daily share price.”
As Buffett usually says, chapter 8 and 21 are the most significant, but the whole book is excellent.
Even so, if you're looking to start investing and want to buy shares I would still highly recommend that you read this book. I think you need to read something like this to get a solid foundation and also help to set your expectations. For me, this book made me realise I am a speculative investor, and probably always will be. Being an intelligent investor is a full time job. There is an enormous amount of work involved. But because of this knowledge, I evaluate risk differently and as a result can make more informed decisions about my investments.
Read it. Realise it's too much work. Gamble.
This book may not be an easy read considering the amount of financial terms and historical references. But hell yeah, it's probably one of the best examples on how to approach the dealing of financial instruments.
Although it was first published long time ago, it will never become unfashionable.
Simply a must read, it will change your perspective about the stock market forever.
It is true that there is terminology that is hard to understand at first, but I've found that by watching some short videos online you can educate yourself very quickly on the basics.
Once you understand the background the book becomes much easier and much more enjoyable, so I would not be discouraged if this is also a new concept for you.
Overall I have learnt a lot from Graham's timeless wisdom and it has now inspired me to invest in my first index fund.