The Intelligent Investor

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The Intelligent Investor
Theintelligentinvestor.jpg
First edition
Author Benjamin Graham
Country United States
Language English
Subject Finance
Publisher Harper & Brothers
Publication date
1949

The Intelligent Investor by Benjamin Graham, first published in 1949, is a widely acclaimed book on value investing, an investment approach Graham began teaching at Columbia Business School in 1928 and subsequently refined with David Dodd. Famous investor Warren Buffett described it as "by far the best book on investing ever written",[1] a sentiment echoed by other Graham disciples such as Irving Kahn and Walter Schloss.

The Intelligent Investor also marks a significant deviation to stock selection from Graham's earlier works such as Security Analysis. He explained the change in paradigm as:

The thing that I have been emphasizing in my own work for the last few years has been the group approach. To try to buy groups of stocks that meet some simple criterion for being undervalued-regardless of the industry and with very little attention to the individual company.................. I found the results were very good for 50 years. They certainly did twice as well as the Dow Jones. And so my enthusiasm has been transferred from the selective to the group approach.[2]

Mr. Market[edit]

Main article: Mr. Market

Graham's favorite allegory is that of Mr. Market, an obliging fellow who turns up every day at the shareholder's door offering to buy or sell his shares at a different price. Often, the price quoted by Mr. Market seems plausible, but sometimes it is ridiculous. The investor is free to either agree with his quoted price and trade with him, or ignore him completely. Mr. Market doesn't mind this, and will be back the following day to quote another price.

The point of this anecdote is that the investor should not regard the whims of Mr. Market as a determining factor in the value of the shares the investor owns. He should profit from market folly rather than participate in it. The investor is advised to concentrate on the real life performance of his companies and receiving dividends, rather than be too concerned with Mr. Market's often irrational behavior.

Editions[edit]

Since the work was published in 1949 Graham revised it several times, most recently in 1971/72. This was published in 1973 as the Fourth Revised Edition ISBN 0-06-015547-7, and it included a Preface and Appendixes by Warren Buffett. Graham died in 1976. Commentaries and new footnotes were added to the fourth edition by Jason Zweig, and this new revision was published in 2003.[3]

  • The Intelligent Investor (Re-issue of the 1949 edition) by Benjamin Graham. Collins, 2005, 269 pages. ISBN 0-06-075261-0.
  • The Intelligent Investor (Revised 1973 edition) by Benjamin Graham and Jason Zweig. HarperBusiness Essentials, 2003, 640 pages. ISBN 0-06-055566-1.

Book contents[edit]

2003 edition by Benjamin Graham and Jason Zweig

  • Preface to the Fourth Edition, by Warren E. Buffett
  • A Note About Benjamin Graham, by Jason Zweig
  • Introduction: What This Book Expects to Accomplish
  • Commentary on the Introduction
  1. Investment versus Speculation: Results to Be Expected by the Intelligent Investor
  2. The Investor and Inflation
  3. A Century of Stock Market History: The Level of Stock Market Prices in Early 1972
  4. General Portfolio Policy: The Defensive Investor
  5. The Defensive Investor and Common Stocks
  6. Portfolio Policy for the Enterprising Investor: Negative Approach
  7. Portfolio Policy for the Enterprising Investor: The Positive Side
  8. The Investor and Market Fluctuations
  9. Investing in Investment Funds
  10. The Investor and His Advisers
  11. Security Analysis for the Lay Investor: General Approach
  12. Things to Consider About Per-Share Earnings
  13. A Comparison of Four Listed Companies
  14. Stock Selection for the Defensive Investor
  15. Stock Selection for the Enterprising Investor
  16. Convertible Issues and Warrants
  17. Four Extremely Instructive Case Histories and more
  18. A Comparison of Eight Pairs of Companies
  19. Shareholders and Managements: Dividend Policy
  20. "Margin of Safety" as the Central Concept of Investment
  • Postscript
  • Commentary on Postscript
  • Appendixes
  1. The Superinvestors of Graham-and-Doddsville
  2. Important Rules Concerning Taxability of Investment Income and Security Transactions (in 1972)
  3. The Basics of Investment Taxation (Updated as of 2003)
  4. The New Speculation in Common Stocks
  5. A Case History: Aetna Maintenance Co.
  6. Tax Accounting for NVF's Acquisition of Sharon Steel Shares
  7. Technological Companies as Investments
  • Endnotes
  • Acknowledgments from Jason Zweig
  • Index

See also[edit]

References[edit]

  1. ^ Graham, Benjamin; Jason Zweig (2003-07-08) [1949]. The Intelligent Investor. Warren E. Buffett (collaborator) (2003 edition ed.). HarperCollins. front cover. ISBN 0-06-055566-1. 
  2. ^ An hour with Mr. Graham
  3. ^ Graham, Benjamin; Jason Zweig (2003-07-08) [1949]. The Intelligent Investor. Warren E. Buffett (collaborator) (2003 edition ed.). HarperCollins. p. vii. ISBN 0-06-055566-1. 

Further reading[edit]

External links[edit]