The Intelligent Investor Book Review in 30 Minutes

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 Intelligent Investor, by Benjamin Graham, is probably the most important and influential value investing book ever written. Warren Buffet described it as “by far the best book ever written on investing”.

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Investment, Speculation, Inflation, and Market History – The Intelligent Investor Book Review (Chapters 1, 2, & 3)

One of the most important and basic rules is to keep the activities of investment and speculation totally separate. Intelligent investing involves: 1) analysis of the fundamental soundness of a business 2) a calculated plan to prevent a severe loss and 3) the pursuit of a reasonable return. Speculation involves basing decisions on the market price, hoping that someone will pay more than you at a later date.

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The Defensive Investor – The Intelligent Investor Book Review (Chapters 4, 5, & 14)

The defensive investor should understand the difference between prediction (qualitative approach) and protection (quantitative or statistical approach). The risky approach is to try and predict or anticipate the future. The protection approach measures the proportion or ratios between price and relevant statistics (i.e. earnings, dividends, assets, debt, etc.).

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Mr. Market & Fluctuations – The Intelligent Investor Book Review – Chapter 8

If every investor did their research and only bought stocks with a margin of safety below the intrinsic value of the company, the market would be efficient and fairly stable. But we know that this isn’t true. The market swings wildly from day to day and takes large swings in valuation over periods of euphoria and pessimism.

Graham used a parable with an imaginary investor named Mr. Market to illustrate how an intelligent investor should take advantage of market fluctuations. This is a parable about greed and fear, price and value, and how the intelligent investor will react.

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Investment Funds & Advisors – The Intelligent Investor Book Review – Chapters 9 & 10

The most important objective of the advisor may be to save you from your own worst enemy, YOU. A good advisor will help you keep your emotions in control, especially at important moments. Instead of panic selling, are you going to be prepared to buy when prices have fallen? Instead of following the crowd, who might be buying at prices far above intrinsic value, are you going to look elsewhere for better values?

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