Warren Buffett called it, “By Far The Best Book on Investing Ever Written.” I’m talking about the book The Intelligent Investor by Benjamin Graham.
My goal this year is to spend at least 15 minutes a day reading through this 589 page masterpiece. This article is the introduction or initial review of The Intelligent Investor. I’ll link to specific chapter reviews within this article.
The Intelligent Investor PDF
The Intelligent Investor Review
In business school, we discussed some of the basic principles of investing and learned the underlying equations used to calculate bond prices, yields, and present value – but unless you keep using these equations, they start to fade from your memory.
The reason I want to devour The Intelligent Investor is because it’s not a book on equations or statistical analysis. It’s more of a instructional guide to understanding the psychology behind investing.
In the 4th edition, Warren Buffet wrote an introduction and referenced this book as an “intellectual framework for making decisions and the ability to keep emotions from corroding that framework.”
Here’s the thing: I don’t ever expect to become an expert investor on Wall Street. I don’t want to be. But that doesn’t mean we should be ignorant about investing!
The Intelligent Investor is written for anyone interested in learning what it takes to develop a mindset of a good investor. Here are the core principles that Ben Graham outlines in the book:
- When you own stock, you own interest in an actual business that has value independent of its share price
- An intelligent investor is someone who sells to optimists and buys from pessimists
- Future value is always tied to present price – the more you pay, the lower your return will be.
- You can minimize your chance of error by never overpaying – a principle called the “margin of safety.”
- Our behavior and patience will matter more than how our investments perform.
If you’re just starting with investing understand this:
- It’s never too early to start investing or to learn about investing
- You can become a smart investor in less time that you think.
It’s not about becoming an expert in the tax code, or the stock market. It’s about educating yourself on sound investing basics and developing a mindset that will set you up on a successful path in your investments.
In a market that’s driven by fear and hype (especially today), I think the 1949 classic The Intelligent Investor is a must read for those who want to start thinking for themselves.
As I find gold nuggets in the book, I’ll try to share it and link to it in this article.
Have you read The Intelligent Investor or any other financial book lately?