The Intelligent Investor: The Classic Text on Value Investing – Deckle Edge Author: Visit Amazon's Benjamin Graham Page | Language: English | ISBN:
0060752610 | Format: EPUB
The Intelligent Investor: The Classic Text on Value Investing – Deckle Edge Description
Review
“By far the best book on investing ever written.” (Warren Buffett)
“If you read just one book on investing during your lifetime, make it this one” (Fortune)
“The wider Mr. Graham’s gospel spreads, the more fairly the market will deal with its public.” (Barron's)
About the Author
Benjamin Graham (1894-1976), the father of value investing, has been an inspiration for many of today's most successful businesspeople. He is also the author of Securities Analysis and The Interpretation of Financial Statements.
- Hardcover: 304 pages
- Publisher: HarperBusiness; 4.3.2005 edition (May 3, 2005)
- Language: English
- ISBN-10: 0060752610
- ISBN-13: 978-0060752613
- Product Dimensions: 9.2 x 6.2 x 1 inches
- Shipping Weight: 1.2 pounds (View shipping rates and policies)
When Warren Buffett says that this book is by far the best book ever written on investing one has to take notice. While "The Intelligent Investor" exists in print in several editions, (4th rev edition 0060155477, 2003 rev edition w/ Jason Zweig 0060555661, and some audio book versions), this is a reprint of the original 1949 edition and has several virtues.
It is the original statement of what has come to be called Value Investing. This is a very philosophical book more than a book of techniques or methods of investing. Mr. Graham writes firmly and clearly about where the Investor's interests really lie. He is very hard on brokers, whose profession he considered more of a semi-profession because they have their own interests at heart more than those of their client. He also makes a strong case of about the kinds of returns one can expect from the market versus a company one actively manages. If investors of the 1990s had headed his views on management and their interests not being aligned with those of shareholders a lot less money would have been lost.
In several places he states that shareholders need to act more like owners and should not simply submit to management or let them have free reign with the resources of the company. He also advocated the importance of an independent board of directors rather than a board of management cronies. He rejects the notion of simply selling shares if you don't like the way the company is being managed. That is a dereliction of their duty as owners.
There is also a discussion of a variety of approaches to investing and he contrasts defensive investing or investing using analysis versus speculating.
This book is a true classic, and most investors would be well-advised to start with this book as they seek to learn more about the process of making their money work for them. In particular, Graham's book is useful because it recognizes that the universe of potential investments is greater than just stocks - he covers warrants, bonds, etc.
Graham's main point is that investors look at the fundemantals that underly a potential investment to determine the probability of a satisfactory outcome. Hence, Graham does not focus on macroeconomic factors, but instead, he determines the "intrinsic value" for any investment, hopefully buying well below that value, a concept he calls the "margin of safety."
As some reviewers have noted, this book has been criticized by some thinkers as being out of date. In particular, most readers should understand that one of the theories that underlies Graham's philosophy, that a stock is worth the aggregate value of its expected dividends (See John Burr Williams' "Theory of Investment Value"), has been modified somewhat by "discounted cash flow" theories. This means that to some investors, p/e ratios and dividend payouts are de-emphasized somewhat. To me, this does not mean that Graham's theories lose validity, particularly as concerns the notions of intrinsic value and the margin of safety.
As far as I am concerned, Graham's book is most useful when viewed as a theory about how to invest. As such, it is a valuable guide, particularly when read in conjunction with Phil Fisher's book "Common Stocks and Uncommon Profits" and Marty Whitman and Marty Shubik's book "The Aggressive Conservative Investor." Another book that readers of the Intelligent Investor might like would be Dreman's "Contrarian Investing: the Next Generation.
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