The Intelligent Investor -Bejamin Graham

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Benjamin Graham would easily be the most famous investor of the 20th century, if it weren’t for his student – Warren Buffett – likely the only person to surpass him in investing brilliance.

Coming from poverty he became an excellent student at Columbia and upon graduation started his investing career with a job on Wall Street. He wrote down his investing principles in 1949 inside The Intelligent Investor, which Warren Buffett calls the best book on investing ever written.

Here are 3 key lessons from Graham’s book to help you start investing:

  1. There are 3 principles to intelligent investing: analyze for the long term, protect yourself from losses, and don’t go for crazy profits.
  2. Never trust Mr. Market, he can be very irrational in the short and medium term.
  3. Stick to a strict formula by which you make all your investments, and you’ll do fine.
  4. Always create a margin of safety while buying any stock. Never buy a stock for more than two-third of its intrinsic value.

There are 9 principles for being a Defensive investor

  1. Divide your portfolio in 50:50 (at least 50% should be kept in cash or liquid assest)
  2. Diversify your portfolio.
  3. Invest in Large companies
  4. Conservatively financed i.e. Invest in companies having current ratio of 2:1
  5. Read about Dividend history of the company
  6. Read about Earning history of the company
  7. Invest in companies having growth of at least 3%
  8. Intrinsic value of the company should be at least 1.5 times.
  9. P/E ratio should be less than 15 times.

4 Qualities of an investor are:

  1. Patience
  2. Discipline
  3. Eagerness to learn
  4. Lots of time

Qualities of an enterprise investor are:

  1. Going against the market.
  2. Divide your portfolio in 75:25 (instead of 50:50)
  3. Buying stock of companies having a good growth rate
  4. Buying stocks of companies which are traded at a lower price
  5. Buying special cases stocks.

You can buy the book from the link below.

Happy Reading 🙂