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Definition of Intelligent investor (by Graham) o Nothing to do with IQ or SATS; is a trait more of character than the brain Being patient, disciplined and eager to learn Able to harness your emotions and think for yourself The Intelligent Investor By Benjamin Graham. The Intelligent Investor written by Benjamin Graham is the book for you. Ever since Benjamin Graham wrote The Intelligent Investor in 1949, it has helped millions of investors, amateur & professionals learn and master stock market investing. His teachings have become legends as philosophies of value investing. The Intelligent Investor explains how to become a reliable investor of the stock market, including methods for making the best investments for you. The Big Takeaways: An intelligent investor doesn't just invest; they think their investments through to the end.

The Intelligent Investor by Benjamin Graham, first published in 1949, is a widely acclaimed book on value investing. The book teaches readers strategies on how to successfully use value investing in the stock market. Historically, the book has been one of the most popular books on investing and Graham's legacy remains. The Intelligent Investor is notable today, with many famous investors praising it for helping them learn how to determine value in the stock market and successfully pick stocks for their portfolios. The main analysis of the book is focused on value investing, the allegory of Mr. Market, and determining value.^[1]

Background and history[edit]

The Intelligent Investor is based on value investing, an investment approach Graham began teaching at Columbia Business School in 1928 and subsequently refined with David Dodd.^[2] This sentiment was echoed by other Graham disciples such as Irving Kahn and Walter Schloss. Warren Buffett read the book at age 20 and began using the value investing taught by Graham to build his own investment portfolio.^[3]

The Intelligent Investor also marks a significant deviation to stock selection from Graham's earlier works, such as Security Analysis. He explained the change as:

The thing that I have been emphasizing in my own work for the last few years has been the group approach. To try to buy groups of stocks that meet some simple criterion for being undervalued -- regardless of the industry and with very little attention to the individual company... I found the results were very good for 50 years. They certainly did twice as well as the Dow Jones. And so my enthusiasm has been transferred from the selective to the group approach.^[4]

Analysis[edit]

Value Investing[edit]

Graham's main investment approach outlined in The Intelligent Investor is that of value investing.^[5] Value investing is an investment strategy that targets undervalued stocks of companies that have the capabilities as businesses to perform well in the long run.^[3] Value investing is not concerned with short term trends in the market or daily movements of stocks.^[6] This is because value investing strategies believe the market overreacts to price changes in the short term, without taking into account a company's fundamentals for long-term growth.^[3] In its most basic terms, value investing is based on the premise that if you know the true value of a stock, then you can save lots of money if you can buy that stock on sale.^[7]

Mr. Market[edit]

One of Graham's important allegories is that of Mr. Market, meant to personify the irrationality and group-think of the stock market. Mr. Market is an obliging fellow who turns up every day at the shareholder's door offering to buy or sell his shares at a different price. Often, the price quoted by Mr. Market seems plausible, but sometimes it is ridiculous. The investor is free to either agree with his quoted price and trade with him, or ignore him completely. Mr. Market doesn't mind this, and will be back the following day to quote another price.

The point of this anecdote is that the investor should not regard the whims of Mr. Market as a determining factor in the value of the shares the investor owns. He should profit from market folly rather than participate in it. A common fallacy in the market is that investors are reasonable and homogenous, but Mr. Market serves to show that this is not the case. The investor is advised to concentrate on the real life performance of his companies and receiving dividends, rather than be too concerned with Mr. Market's often irrational behavior.

Determining Value[edit]

In The Intelligent Investor, Graham explains the importance of determining value when investing. In order to invest for value successfully and avoid participating in short-term market booms and busts, determining the value of companies is essential.^[8] To determine value, investors use fundamental analysis. Mathematically, by multiplying forecasted earnings over a certain number of years times a capitalization factor of a company, value can be determined and then compared to the actual price of a stock. There are five factors that are included in determining the capitalization factor, which are long-term growth prospects, quality of management, financial strength and capital structure, dividend record, and current dividend rate. To understand these factors, value investors look at a company's financials, such as annual reports, cash flow statements and EBITDA, and company executives's forecasts and performance.^[2] This information is all available online as it is required for each public company by the SEC.^[9]

Reception[edit]

Benjamin Graham is regarded as the father of value investing and his book The Intelligent Investor was highly regarded by the public and remains that way. Ronald Moy, professor of economics and finance at St. John's University, explains that 'The influence of Graham's methodology is indisputable. His disciples represent a virtual who's who of value investors, including Warren Buffett, Bill Ruane, and Walter Schloss'.^[5] Warren Buffett is regarded as a brilliant investor and Graham's best-known disciple.^[10] According to Buffett, The Intelligent Investor is 'By far the best book on investing ever written.' Ken Faulkberry, founder of Arbor Investment Planner, claims, 'If you could only buy one investment book in your lifetime, this would probably be the one'.^[10] Many of Graham's investment strategies explained in the book remain useful today despite massive growth and change in the economy.^[6] Scholar Kenneth D. Roose of Oberlin College writes, 'Graham's book continues to provide one of the clearest, most readable, and wisest discussions of the problems of the average investor'.^[6] The Intelligent Investor was received with praise from economic scholars and everyday investors and continues to be a premier investing book today.

Editions[edit]

Since the work was published in 1949 Graham revised it several times, most recently in 1971–72. This was published in 1973 as the 'Fourth Revised Edition' ISBN0-06-015547-7, and it included a preface and appendices by Warren Buffett. Graham died in 1976. Commentaries and new footnotes were added to the fourth edition by Jason Zweig, and this new revision was published in 2003.^[11]

• The Intelligent Investor (Re-issue of the 1949 edition) by Benjamin Graham. Collins, 2005, 269 pages. ISBN0-06-075261-0.
• The Intelligent Investor by Benjamin Graham, 1949, 1954, 1959, 1965(Library of Congress Catalog Card Number 64-7552) by Harper & Row Publishers Inc, New York.
• The Intelligent Investor (Revised 1973 edition) by Benjamin Graham and Jason Zweig. HarperBusiness Essentials, 2003, 640 pages. ISBN0-06-055566-1.

An unabridged audio version of the Revised Edition of The Intelligent Investor was also released on July 7, 2015.^[12]

Book contents[edit]

Intelligent Investor Pdf Latest Edition

2003 edition

• Introduction: What This Book Expects to Accomplish
• Commentary on the Introduction

1. Investment versus Speculation: Results to Be Expected by the Intelligent Investor
2. The Investor and Inflation
3. A Century of Stock Market History: The Level of Stock Market Prices in Early 1972
4. General Portfolio Policy: The Defensive Investor
5. The Defensive Investor and Common Stocks
6. Portfolio Policy for the Enterprising Investor: Negative Approach
7. Portfolio Policy for the Enterprising Investor: The Positive Side
8. The Investor and Market Fluctuations
9. Investing in Investment Funds
10. The Investor and His Advisers
11. Security Analysis for the Lay Investor: General Approach
12. Things to Consider About Per-Share Earnings
13. A Comparison of Four Listed Companies
14. Stock Selection for the Defensive Investor
15. Stock Selection for the Enterprising Investor
16. Convertible Issues and Warrants
17. Four Extremely Instructive Case Histories and more
18. A Comparison of Eight Pairs of Companies
19. Shareholders and Managements: Dividend Policy
20. 'Margin of Safety' as the Central Concept of Investment

• Postscript
• Commentary on Postscript
• Appendixes

1. The Superinvestors of Graham-and-Doddsville
2. Important Rules Concerning Taxability of Investment Income and Security Transactions (in 1972)
3. The Basics of Investment Taxation (Updated as of 2003)
4. The New Speculation in Common Stocks
5. A Case History: Aetna Maintenance Co.
6. Tax Accounting for NVF's Acquisition of Sharon Steel Shares
7. Technological Companies as Investments

• Endnotes
• Index

See also[edit]

References[edit]

1. ^'DAYOFBOOKS - ENJOY THE LIFE WITH BOOKS'. DAYOFBOOKS. Retrieved 2021-01-06.
2. ^ ^abGraham, Benjamin; Jason Zweig (2003-07-08) [1949]. The Intelligent Investor. Warren E. Buffett (collaborator) (2003 ed.). HarperCollins. front cover. ISBN0-06-055566-1.
3. ^ ^abcPopescu, Dan (2010). 'Warren Buffett, The Intelligent Investor'(PDF).
4. ^'An hour with Mr. Graham: 'Imagine – there seems to be practically a foolproof way of getting good results out of common stock investment…''. 19 February 2013.
5. ^ ^abMoy, Ronald (2011). 'Ben Graham Was a Quant: Raising the IQ of the Intelligent Investor (a review)'. CFA Institute.
6. ^ ^abcRoose, Kenneth D. (1955). 'Review of The Intelligent Investor'. The Journal of Finance. 10 (3): 406–407. doi:10.2307/2976900. ISSN0022-1082.
7. ^Hayes, Adam. 'Value Investing: How to Invest Like Warren Buffett'. Investopedia. Retrieved 2020-12-11.
8. ^Sicsú, João (2020-01-02). 'Keynes and Graham's intelligent investor'. Journal of Post Keynesian Economics. 43 (1): 139–166. doi:10.1080/01603477.2020.1713009. ISSN0160-3477.
9. ^'SEC.gov | HOME'. www.sec.gov. Retrieved 2020-12-11.
10. ^ ^abKenFaulkenberry (2014-09-10). 'The Intelligent Investor Book Review in 30 Minutes'. Arbor Asset Allocation Model Portfolio (AAAMP) Value Blog. Retrieved 2020-12-11.
11. ^Graham, Benjamin; Jason Zweig (2003-07-08) [1949]. The Intelligent Investor. Warren Buffett (collaborator) (2003 ed.). HarperCollins. p. vii. ISBN0-06-055566-1.
12. ^The Intelligent Investor Rev Ed – via www.audible.com.

Further reading[edit]

• Williams, John Burr. The Theory of Investment Value.

Modifications in the latest edition of the classical book by Benjamin Graham — Warren Buffett's mentor — have caused considerable confusion.

Poor Readability

The commentary by Jason Zweig in the 2006 edition of The Intelligent Investor — and the resulting modifications of Graham's text — have made the book considerably harder to read.

A quick visual comparison of Graham's final 1973 edition, against the modified 2006 one, amply demonstrates the reduced readability of the latter.

1. The book is now nearly twice as lengthy, and quite unnecessarily so; as explained below.
2. The chapter list is almost unreadable due to the commentary list, which is all in capital letters.
3. All of Graham's footnotes have been moved to the end of the book, making them nearly impossible to refer to.

This is all especially troublesome considering that the book is addressing a tough subject to begin with.

Example - Chapter List

The Intelligent Investor

As can be seen from the scans below, the 1973 chapter list is far easier to read; despite being from an older book and listing more chapters per page.

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Misinterpretations

The change in structure of Graham's original text has also caused considerable misinterpretation of Graham's principles, as described in Understanding The Benjamin Graham Formula Correctly.

Misquotes

Graham is also frequently misquoted today, often owing to these same modifications to his text.

Contemporary Relevance

The argument made for this debasement of what was a classical work — and perhaps the most important book ever written — on finance, is that it needed modernization.

But Graham himself included all information required to modernize his framework using current interest rates, as well as preceding inflation rates.

When one also factors in the poor opinion of theorists that Buffett and other notable Value Investors have expressed in matters of practical application of investment principles, this update was perhaps nothing more than a marketing gimmick.

Reprint with Bogle's Foreword

The only two versions of The Intelligent Investor currently in print seem to be:

1. The 1949 edition reprinted in 2005 with a foreword by John Bogle.
2. The 1973 edition modified in 2006 with Jason Zweig's commentary.

The foreword by John Bogle in the former is definitely valuable, but the edition itself is obsolete even by Graham's standards. The problems with the latter have already been discussed above.

The Intelligent Investor Audiobook Free

In fact, Graham's acknowledgement to Buffett — that Bogle alludes to in the former — is missing from the latter as well. Bogle also writes:

Intelligent Investor Pdf

'The basic principles of in­telligent investing that [Graham] set forth... have remained virtually intact and unassailable.'