Finance
by Benjamin Graham
How do you invest and stay calm?
Benjamin Graham taught Warren Buffett, and wrote this book in 1949 for ordinary people with savings. He thought an investor's worst enemy was usually himself. So the book is mostly about avoiding big mistakes and keeping your head when prices go mad.
Hear a sample · read by Laura
Graham defines an investment as something that, after thorough analysis, promises safety of your money and an adequate return. Anything else is speculation. He doesn't ban speculating. He wants you to know when you're doing it, and to keep it in a small, separate pot.
Imagine you own part of a business with a partner called Mr. Market. Every day he offers to buy your share or sell you his, at a price that swings with his mood. You never have to accept. Take advantage of his silly prices and ignore the rest.
Graham's last chapter sums up sound investing in three words, margin of safety. Pay so far below what a business is worth that you'll still be fine if your estimate turns out wrong or your luck turns bad.
Graham sorts investors by how much work they'll do. The defensive investor wants safety with little effort, holding good bonds and big, sound companies, with shares never below a quarter or above three quarters. The enterprising investor does the digging and hunts for bargains.
Investing
Graham's investor studies a business first and puts safety before profit. Buying on a hunch is speculating.
Keep it simple
If you don't want to spend hours on it, hold a plain mix of solid stocks and bonds.
Paying too much
A great company can still be a poor buy if you pay too much for it.
Mr. Market
Picture the market as a moody partner quoting prices every day. You can ignore him, or buy when he panics.
Your worst enemy
Most investors hurt themselves more than the market does, by acting on fear and excitement.
A story from the book
In a postscript, Graham tells how his partnership put about a fifth of its money into half of one growing company in 1948. That move made more than all their other decisions in twenty years. One lucky break, he says, can outweigh a lifetime's work, if you're prepared.
One thing to try
Before prices next lurch, write down your split between shares and bonds, somewhere between Graham's quarter and three quarters. Add one rule for when you'll rebalance back to it. When markets go wild, follow the note instead of the news.
Knotd has the key ideas from 250+ non-fiction books, each in a few minutes, in plain words. The Intelligent Investor comes with a Your Move story to make it stick.
Get the whole book on KnotdOpen in the appHow do you invest and stay calm? Benjamin Graham taught Warren Buffett, and wrote this book in 1949 for ordinary people with savings. He thought an investor's worst enemy was usually himself. So the book is mostly about avoiding big mistakes and keeping your head when prices go mad.
Investing or speculating?; Meet Mr. Market; Margin of safety; Defensive or enterprising.
Before prices next lurch, write down your split between shares and bonds, somewhere between Graham's quarter and three quarters. Add one rule for when you'll rebalance back to it. When markets go wild, follow the note instead of the news.
Yes. Knotd has the key ideas from The Intelligent Investor in a few minutes, in plain words, plus a Your Move story to test them. It's one of 250+ non-fiction books in the app.
