“By far the best book on investing ever written”
billionaire investor Warren E. Buffett
The Intelligent Investor has long been regarded as the bible of investing. Benjamin Graham, the father of security analysis, has composed one of the best written books in finance history. This book is full of invaluable insights.
Anyone who wishes to invest in common stocks should read this book before starting. This book provides the framework for investors to relate value to price and to understand and prepare for market fluctuations.
“Price is what you pay, value is what you get.”
The book starts with a definition of investment operations. An investor should make a conscious effort to understand the investing and speculative factors in his common stock purchases. Graham also classifies investors into two types and two types only: the defensive and the aggressive/enterprising investors; there should be no common grounds between the two. The portfolio policy for each is explored.
The second half of the book supplies the reader with the tools and techniques to analyze common stock securities. Extremely instructive case studies are provided to help the reader comprehend the ideas presented.
An emphasis has to be made on chapters 8 and 20 of this book. Regarded as the two most important essays ever written on investing by Warren Buffet, these two chapters demand special comments. Chapter 8 prepares the investor for market fluctuations and supplies the analogy of the famous concept: Mr. Market; it provides the investor with an invaluable insight to deal with stock market fluctuations. Chapter 20 focuses on the central concept of investment. Challenged to distill the secret of sound investing into three words, Ben Graham comes up with “Margin of Safety.” This last chapter explains what is margin of safety and how to look for it in a investment operation.
“If you follow the behavioral and business principles that Graham advocates - and if you pay special attention to the invaluable advice in Chapters 8 and 20 - you will not get a poor result from your investments. Whether you achieve outstanding results will depend on the effort and intellect you apply to your investments, as well as on the amplitudes of stock-market folly that prevail during your investing career.”
Warren E. Buffett