Father of Value Investing – Benjamin Graham

by | Value

Benjamin Graham

Benjamin Graham

When someone says “The Father of Value Investing” most value investors know immediately they are talking about Benjamin Graham (1894 – 1976). Graham developed the concept of fundamental security analysis, and introduced value investing strategies that are still guiding successful investors today.

Related Reading: The Intelligent Investor Book Review

The Early Years

After studying at Columbia University Benjamin Graham began working in 1914 and accumulated a large personal portfolio, only to lose most of it in the 1929 crash and great depression. This led him to publish, in 1934, the first of his iconic books “Security Analysis”, in which he documented his analysis and methods of security valuation.

Professor Benjamin Graham

Graham loved investing and mentoring others. As a Columbia University professor he taught the great Warren Buffett, who has proclaimed Graham’s book “The Intelligent Investor” (1949) the “best book on investing ever written”.

The Intelligent Investor

In the “Intelligent Investor” Graham used his teaching skills to outline his criteria for finding value.  He used the famous parable of Mr. Market to illustrate how an intelligent investor should think and exploit market volatility.

Graham also developed the concept of margin of safety which requires purchasing assets below a conservative valuation of the business. In other words, price matters. The greater the margin of safety the less risky the investment, because there is more room for mistakes or unforeseen events. Eventually a quality investment will realize its true fundamental value and then you can sell the asset.

Graham developed a ground breaking approach to analyzing securities. He used the concept of intrinsic value in comparison to the stock price and establishing a margin of safety before he was willing to make an investment.

Along with his emphasis on valuation Graham favored quality investing. He sought out larger companies with solid balance sheets and favored those that paid a dividend. Graham was adamant that companies have consistent rising earnings, so he looked for companies with sustainable competitive advantages.

The Father of Value Investing

Benjamin Graham developed the concept of comparing   valuations and adhering to strict value investing rules. He is the  Father of Value Investing because his work lives on through value investors; including some of the greatest of all time.

Related Reading: 74 Quotes From The Intelligent Investor, Revised Edition

Arbor Asset Allocation Model Portfolios (AAAMP)

AAAMP Global Value Portfolio

AAAMP Retirement Growth & Income Portfolio

AAAMP Treasure Trove Twelve Portfolio

Three Asset Allocation Portfolios designed to save you time! The highest priority of each portfolio is minimizing portfolio drawdowns. We focus on ideas and concepts inspired by Benjamin Graham (The Intelligent Investor) and Howard Marks (The Most Important Thing).  Focus is on margin of safety, risk management, proper asset allocation, and avoiding behavioral errors!

Learn More

While Arbor Investment Planner has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability, or completeness of third-party information presented herein. The sole purpose of this analysis is information. Nothing presented herein is, or is intended to constitute investment advice. Consult your financial advisor before making investment decisions.

Share This