Benjamin Graham (right) is a legendary investor, the mentor of Warren Buffett (left) and is known for his book 'The Intelligent Investor".
Warren Buffett has suggested his own investing style is "85% Graham".
Here are 12 of his most insightful comments and ideas.
THREAD
Warren Buffett has suggested his own investing style is "85% Graham".
Here are 12 of his most insightful comments and ideas.
THREAD
1. As a student Buffet read a copy of The Intelligent Investor and it changed his life.
"Chapters 8 & 20 have been the bedrock of my investing activities for >60 years. I suggest all investors read those chapters & reread them when the market has been especially strong or weak".
"Chapters 8 & 20 have been the bedrock of my investing activities for >60 years. I suggest all investors read those chapters & reread them when the market has been especially strong or weak".
2. Buffett's admiration for Graham would go so far that he became his pupil at Columbia Business School, and would later work for his firm.
Someone in the Commonstock community kindly curated a series of 10 lectures that Graham gave in 1946/47.
commonstock.com
Someone in the Commonstock community kindly curated a series of 10 lectures that Graham gave in 1946/47.
commonstock.com
3. “In the short run, the market is a voting machine but in the long run, it is a weighing machine".
- Graham's most famous quote. Stocks are traded on popularity in the short term, but the best businesses are valued appropriately over the long term.
- Graham's most famous quote. Stocks are traded on popularity in the short term, but the best businesses are valued appropriately over the long term.
4. The term "Mr Market" was coined by Graham to illustrate the fickle nature of the stock market.
He offers you daily quotations on your stocks; sometimes reasonable and most of the time not.
Graham suggests that investors would be better off ignoring him.
He offers you daily quotations on your stocks; sometimes reasonable and most of the time not.
Graham suggests that investors would be better off ignoring him.
5. "Investing isn’t about beating others at their game. It’s about controlling yourself at your own game".
- Graham believed that trying to beat Wall ST in the short term was a loser's game. He suggests playing your own game and ignoring other participants.
- Graham believed that trying to beat Wall ST in the short term was a loser's game. He suggests playing your own game and ignoring other participants.
6. "People who invest make money for themselves; people who speculate make money for their brokers".
- The investment industry is designed to induce trading volume. Ignore the noise.
- The investment industry is designed to induce trading volume. Ignore the noise.
7. “Invest only if you would be comfortable owning a stock even if you had no way of knowing its daily share price".
- Buffett often echoes this sentiment, saying that we should buy stocks that we would be comfortable owning if the market closed for a decade.
- Buffett often echoes this sentiment, saying that we should buy stocks that we would be comfortable owning if the market closed for a decade.
8. "You must thoroughly analyze a company, and the soundness of its underlying businesses, before you buy its stock; you must deliberately protect yourself against serious losses; you must aspire to “adequate,” not extraordinary, performance.”
- Know what you own and aim high.
- Know what you own and aim high.
9. "The speculator’s primary interest lies in anticipating and profiting from market fluctuations. The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices".
- The difference between speculating and investing.
- The difference between speculating and investing.
10. “A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price".
- Consider yourself the part owner of the businesses you invest in.
- Consider yourself the part owner of the businesses you invest in.
11. “If the reason people invest is to make money, then in seeking advice they are asking others to tell them how to make money. That idea has some element of naïveté".
- Equip yourself with the tools to identify quality companies. Borrowed conviction can be dangerous.
- Equip yourself with the tools to identify quality companies. Borrowed conviction can be dangerous.
12. Lastly, here is a great snippet from Graham describing Warren Buffett's investment style.
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