If you wanted one and only one take away from this book it's the following tip: "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative." The rest of the book is about telling you how to tell the difference (e.g. buying a stock today hoping that it will go up tomorrow WOULD NOT be investing) and how to analyse a companies financials.
I began this book thinking I might have a side hobby of picking individual stocks as a side hobby. This book dispelled me of the glamour of that notion. As Benjamin Graham himself notes, a passive investor (someone who invests to at least match the average return of the stock market) can enoy success with a minimum of time while an enterprising investor (someone who works to "beat" the stock market) would only have a reasonable chance of success after doing lots of work as analysis and also having the necessary intellectual aptitude. Being an enterprising investor isn't for me because I can't dedicate the time to adequately research companies as he teaches in his book. I suspect that my situation would be the same as 99% of other people who want to invest their money.
What the book did most effectively for me is resolve my latent Dunning-Kruger effect where I imagined I could beat the intelligent people of Wall Street at their own game. I found the chapter commentaries by Jason Zweig to be especially helpful at highlighting amateur speculators who jumped into hot trends like dot com companies right before the industry collapsed. Both Jason and Ben work painstakingly to illustrate how hard it is to do the work of properly evaluating a company and establishing its true value vs its current price on the stock market or its book value (the balance of how much the companies assets are worth after already accounting for debts and liabilities).
The book helped me become literate about the different forms of investments available to me and the merits and handicaps of each. Bonds, Preferred Stocks, ETF's and Treasury Bills meant nothing to me before reading the book. Now I have a fair enough grasp of all investment tools to know what I'm getting into if I should ever choose to invest. The book is a long read as it goes through the in depth process of educating a lay person like myself but it does its job well. In that sense the book has aged marvelously with the help of modern commentary by Jason Zweig.
One drawback for me is that at various points Graham and Zweig tried to discuss how to address tax on capital income best but the advice was only relevant to an American. As a Canadian, I skipped those chapters and I had to research for myself about best reducing the taxable amount on my investment gains. Canadians might find a similar book written by a Canadian to be a better choice. Better yet, read both and be even more well prepared for investing on your own.
In the end, I decided that a balanced portfolio of ETF's tracking stocks and Canadian bonds. Being able to buy these on my own, without being hand held by a broker means that this book will probably already be saving me hundreds of dollars by the end of the year in management fees. Trust me, this book will pay for itself many times with sensible and sober advice.
In the future, I might do some angel investing for small start ups that I'm familiar with or other non-publicly traded investment opportunities. I'll only be doing that after reading many other books of the same caliber as this one. Even then, I'll be considering Graham's sagely advice to invest based on my careful assessment of what a company is actually worth, or in his words to “invest only if you would be comfortable owning a stock even if you had no way of knowing its daily share price.”
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BhaveshB.O.T™
🔴#1 HONEST(Unbiased) REVIEW of The Intelligent Investor "Investment Book For Lifetime"
Reviewed in India 🇮🇳 on May 30, 2019Verified Purchase
BhaveshB.O.T™
Reviewed in India 🇮🇳 on May 30, 2019
*Book: "You either get the idea in the first five minutes, or you don't get it at all", said Warren Buffet in the epilogue.
- I would add - you don't necessarily need to read all 550 pages, but you must read through the idea of value investing - and it will change your way of looking at the world.
- I always felt confused and amazed by listening to all the ridiculous fuzz that comes from the Wall Street through TV and the internet. The book explains why.
🔴Several rules I noted into my keep:
፨ - Investor buys the business [based on its price/value], speculator buys the stock [based on an absurd believe that he can foresee where the stock price will go].
፨ - The best way to earn adequate return without any trouble whatsoever is to invest into cheap (low maintenance cost) indexes; use dollar averaging (buy every month instead of once at a random point of time) for smoothing the luck involved.
፨ - For enterprising investor (willing to spend much more time), look for a diversified list of bargain issues (at least 30 issues, business values (i.e. net current asset and other related metrics) is below market cap)
፨ - During the bubble, hot industries and companies are getting overpriced. That could only be financed from somewhere. Partially that money are coming from well established old economy companies that lose the appeal. Thus, invest in such old economy companies while bubble grows, as soon as the bubble burst - undervalued companies would rise back.
፨ - Don't ever buy IPOs! (See chapter for compelling arguments)
፨ - Don't consider companies that do not pay dividends. Dividends - money firm pays you for providing capital, they belong to you. They cut a piece for reinvestment - payout ratio. If firm doesn't pay dividends - invest all into growth so you could profit later - that's a speculation. Moreover stock price would be more volatile because it should now rely on future rather than current prospects.
The Intelligent Investor, by Benjamin Graham, is probably the most important and influential value investing book ever written even Warren Buffet described it as “by far the best book ever written on investing”.
፨ If you could only buy one investment book in your lifetime, this would probably be the one.
፨ It had been 6 months since I last read The Intelligent Investor. I have enjoyed my personal “refresher course” in value investing.
🔴Objective of The Intelligent Investor Book
፨ Benjamin Graham’s objective was to provide an investment policy book for the ordinary investor.
፨ He succeeded in putting seemingly hard concepts into terms that could be understood and, more importantly, implemented by the average investor.
፨ The typical investor has a tendency to “follow the market” when they should be employing portfolio risk management strategies. Instead, Graham gives us an alternative based on fundamental stock analysis.
፨ The goal is to learn how to avoid the pitfalls of allowing our emotions to control our investment decisions. Rather, Graham provides the foundation for making businesslike decisions.
🔴The Intelligent Investor puts special emphasis on teaching:
1. Risk management through asset allocation and diversification.
2. Maximizing probabilities through valuations analysis and margin of safety.
3. A disciplined approach that will prevent consequential errors to a portfolio.
🔴If you have any Doubt regarding this Review or this Product, then Feel Free to Contact me or Just ask me by commenting below.I Hope this Review was Helpful.Write reviews, help others, happy shopping.
Thank You for Reading this Review.
-●➽ʙʜᴀᴠᴇsʜ ʙ.ᴏ.ᴛ 🔥
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B.Sudhakar Shenoy
Investing is more a matter of ‘character’ than ‘brain’
Reviewed in India 🇮🇳 on August 14, 2018Verified Purchase
Indranil Dey
paper quality all of this book is very good.
Reviewed in India 🇮🇳 on November 17, 2017Verified Purchase
Indranil Dey
Reviewed in India 🇮🇳 on November 17, 2017
Printing, font size, paper quality all of this book is very good.
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Matt Bourne
A must for anyone curious about investing...
Reviewed in the United Kingdom 🇬🇧 on September 20, 2018Verified Purchase
John Garling
Excellent but Completely Outdated
Reviewed in the United States 🇺🇸 on August 18, 2018Verified Purchase
