The Intelligent Investor: A Book of Practical Counsel Hardcover – 1973
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Ben Graham is single-handedly responsible for the fact that investors even think about ratios like the price/earnings ratio, the current ratio or working capital-to-market capitalization. Coming out of the stock market's total implosion in 1929 and throughout the '30s, Graham knew that he needed to discover logical rules that any investor could use in order to attain safe, sustainable, market-beating results. He was so preoccupied with ensuring that anyone could duplicate his methods towards the end of his career that he often told his junior analysts at Graham-Newman like Albert Schloss or Warren Buffett that they could not involve themselves in complicated financial shenanigans to make money--it all had to be plain vanilla.
The Intelligent Investor was Graham's attempt to make his cumbersome joint-effort with David Dodd--Security Analysis--comprehensible to the average person. Much like Nietzsche's Beyond Good & Evil was intended to make Thus Spoke Zarathustra transparent, Graham's Intelligent Investorset about educating the average person as to what made an investment, what made a speculation and how this knowledge could be applied to build wealth in the most risk-averse way possible. Although he was a little bond-crazy, Graham's zeal for the common investor made him about as Foolish as they come. The fifth edition of The Intelligent Investor comes with the added bonus of a laudatory introduction by editor Warren Buffett as well as the best essay Warren Buffett ever wrote, bar none, called "The Superinvestors of Graham & Doddsville." Although it can make for pretty dense, didactic reading, the investor will come away from The Intelligent Investor with a newfound understanding of how the numbers fit together to make a great stock. -- The Motley Fool, Randy Befumo
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.
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Top Customer Reviews
The conclusion is that if you have the discipline and follow the advise with rigour, you will make money on the stock market. It is not for a day trader but a genuine investor.
There are many pieces of sound advice. One of the recommended easy and time saving way to pick a stock: buy the stock of Dow Index companies with minimum P/E ratio.
It is a classic.
Yes the latest edition was written in 1972. It is amusing at time to see the evolution. But actually this evolution is also part of what you learn by reading the book. You do see that some things never change (like valuing a company!), and others do change quite a bit. it gives you a nice perspective. Now the intersting part of the book is to understand the logic of Graham, less its conclusions. The conclusions date a bit. Graham used to work at a time when most corporations where industrial companies, when nowadays services are dominant for example. So take graham conclucions with a grain of salt. But do read in depth and try to understand his logic.
Value investing won't make you rich overnight. But reasonnably well done, it will avoid having you lose money, and can even open you the doors of year by year over-performance in the market. Warren Buffett and several other successfull investors have followed the approach of Graham. But as they all say, when you first read about value investing, you either understand it right away, or you never will. But trust my 15 year of investing on the stock market, you're better of understanding the value of value investing. And this book is the key to it.
Investing is most intelligent when it is most businesslike. After all, you are neither right or wrong when the market disagrees with you. You are right because your data and reasoning are right. True, there is safety in growth and some of us will go as far as to declare that there can be no real safety except in growth. But these sound to me like slogans than scientifically formulated and verified propositions. A case can be made for putting all your growth eggs in the best or relatively few best baskets.
If we assume that it is the habit of the market to overvalue common stocks which have been showing excellent growth or are glamorous for some other reason, it is logical to expect that it will undervalue - relatively, at least - companies that are out of favor because of unsatisfactory developments of a temporary nature. Focus on larger companies, for 2 reasons: First they have the resources in capital and brain power to carry them through adversity and back to a satisfactory earnings base. Second, the market is likely to respond with reasonable speed to any improvement shown.
Let me emphasize that it does not take a genius or even a superior talent to be successful as a value analyst. What it needs is, first, reasonably good intelligence; second, sound principles of operation; third, and most important, firmness of character.
Now, let me close with a few words of counsel from an 80-year-old veteran of many a bull and many a bear market.Read more ›
First of all, dollar cost averaging is praised(we dont know where the market is headed, as they tend to overextend themselves in either direction); at minimum a 25% allocation to bonds, even for the very young investor will allow rebalancing to take advantage of overvalued and undervalued markets.
Second, it provides valuable evidence as to why investors should not speculate.
Third, it emphasizes the importance of intrinsic value and lays out data which will convince you that "value" investing is not just the style right now, but the only method by which to invest for the buy and hold investor. E.g. run a screen of the best ten mutual funds of the last decade or so, most are large cap value.
Fourth, there is alot of free info on the internet. For the beginner the fool is the best site, however their books are long winded, when you have learned from their free stuff then use this text plus essays from warren buffet.
If you ever want to pay for advice fool and morningstar beat full service brokers hands down if you have the time and inclination.
This text is the best investing manual for the intermediate long term investor. Drawback? Outdated in the sense that in the last 30 years book value as a variable in intrinsic value calculations has lessened, and intellectual capital has become of increasing importance and is less easily measured.
E.G. pharmaceuticals. However, i view this as a slight knock.Read more ›
Most recent customer reviews
This is a great investing book, but I bought the one from '72 so there are some dated aspects. Seller was awesome and the book was great value and arrived in like new condtion.Published on Sept. 7 2011 by Investorman
Before deciding on whether to buy this book or not, one should take into account that even this version is 30+ years old, and that the original version was written over 50 years... Read morePublished on March 28 2004 by Christer Jönsson
It may seem an odd thing to say about a book whose hallmark is prudence, but this volume is dangerous. Read morePublished on Dec 6 2003
Graham's book is by far the most thorough, well thought out volume on investing that has ever been produced. Graham's thought processes and advice are indispensable.Published on Nov. 10 2003
This book is must reading for anyone who is serious about investigating and analyzing investment opportunities in a logical, sound and prudent manner.Published on April 1 2003
There is no doubt that Benjamin Graham's insights and expertise have shaped the science of portfolio management to what it is today. Read morePublished on March 4 2003 by Review Monster
I am a firm believer in the concept of value investing and dollar cost averaging. Graham, the father of these concepts, outlines his viewpoints in a candid and frank manner and... Read morePublished on Sept. 27 2002 by Thomas N. Tsongas
The book lays out benchmarks for bonds and stock pricing. Earnings coverage for bonds for the different classes of safety - its a synopsis of his security analysis section - and... Read morePublished on Aug. 20 2002 by Rob
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