The Intelligent Investor: Benjamin Graham’s Classic Guide to Value Investing
The Intelligent Investor is considered a real gem for anyone who wants to invest successfully in the stock market. First published in 1949, it has remained a bestseller ever since, and it is recommended by investors such as Warren Buffett, who has called it by far the best book about investing ever written.
Author: Benjamin Graham (1894–1976); commentary by Jason Zweig
Title: The Intelligent Investor (1949; third edition 2024)
Format: English paperback (Harper Business), 640 pages
Scope: The classic text on value investing, with modern commentary on every chapter
Amazon: www.amazon.es/dp/0063423529 (ASIN 0063423529)
Advice and Warning
The book offers both advice and warning. Advice, because it can help you set criteria for choosing securities with good growth potential. Warning, because it alerts investors to the ’siren songs’ that can drag them into heavy and irreversible losses. Few books on the stock market have offered a view so close to reality: so practical and so full of examples.
A Classic Kept Up to Date
Since its first editions it has kept its reputation as the most valued and respected guide to investing. Over time, the evolution of the market has confirmed the wisdom of Benjamin Graham’s basic principles: the difference between investment and speculation, the margin of safety, and the famous parable of Mr Market. The current edition adds Jason Zweig’s commentaries, which set each chapter against recent market history.
Mr Market
Graham’s most famous image is Mr Market, an imaginary business partner who turns up every day offering to buy your share or sell you his, at a price that depends on his mood. Some days he is euphoric and asks far too much; other days he is depressed and will sell for almost nothing. The intelligent investor, Graham says, should take advantage of Mr Market’s moods rather than be guided by them. Warren Buffett has said that this chapter and the one on the margin of safety are the most important things ever written about investing.
Defensive and Enterprising Investors
Graham distinguishes between two kinds of investor. The defensive investor wants safety and freedom from bother, and should hold a simple, diversified mix of high-grade bonds and the shares of large, financially strong companies, adjusting the balance only within set limits. The enterprising investor is willing to devote time and effort to finding bargains, and Graham gives him strict criteria for doing so. Either way, the key is to know which kind of investor you are and to stick to the rules that fit.
Graham, Buffett and Columbia
Benjamin Graham taught at Columbia Business School and, with David Dodd, wrote Security Analysis (1934), the founding text of value investing. Buffett read The Intelligent Investor at nineteen, enrolled at Columbia to study under Graham and later worked for his investment firm. The book went through several editions, the last revised by Graham himself in 1973.
Why Zweig’s Commentary Helps
Graham’s examples come from companies and markets of decades ago. Jason Zweig, a financial journalist, adds a commentary after every chapter that translates the lessons into recent events, from the dot-com bubble to today, which makes this edition far more useful for a first reading than the original text on its own.
A Practical Tip
Read Zweig’s commentary on each chapter first, then Graham’s text.
Who Should Read It
It is essential reading for individuals who want to understand how the stock market works, investors who want to see their savings grow, speculators, analysts, brokers, teachers, students, advisers, managers and anyone who wants to understand the real mechanics of the markets. It is not a quick read, but it may be the most useful book on money you will ever own.
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