How The Intelligent Investor can teach you valuable lessons today
It was first published 75 years ago and the book that inspired $200bn man Warren Buffett still has a lot to teach.
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What can a 75-year-old book tell you about money that remains relevant?
Plenty, according to the world’s richest investor, Warren Buffett, who is now worth almost $220bn.
The book is Benjamin Graham’s The Intelligent Investor, which Mr Buffett bought in 1950 and still believes it is “by far the best book about investing ever written”. An updated new version has been published this week.
In The Intelligent Investor’s preface, Mr Buffett says of Graham “more than any other man except my father, he influenced my life”.
The new edition is updated and expanded by Wall Street Journal columnist Jason Zweig, who said Graham’s investment business beat the overall US stock market by about 5 per cent a year for two decades from the end of the Great Depression.
“The reason the book is valid and valued today is because of Graham’s profound insights into human nature,” Zweig said.
“He understood, I believe better than anybody who’s ever written about financial markets, that it isn’t investments that make or lose money – it’s investors.
Benjamin Graham introduced the world to Mr Market, a fictional character like the share market who “lets his enthusiasm or his fears run away with him”.
Some of his most famous quotes include:
• “The intelligent investor is a realist who sells to optimists and buys from pessimists.”
• “You will be much more in control, if you realise how much you are not in control.”
• “Those who do not remember the past are condemned to repeat it.”
The book was updated several times by Graham during his lifetime, but not since the early 2000s, and the new version has been published by HarperCollins, a division of News Corp.
He effectively doubled its length with his commentary and modern observations – taking it above 600 pages – and he highlights in bold many of Graham’s key messages to bring attention to them.
“There are many passages in the book that are so beautifully written that you could read them out loud in a theatre,” Zweig said.
“Because Graham wrote decades ago and modern tastes have changed – people like one-liners and zingers now, and everything is it bits and bytes, not paragraphs,” he said.
Zweig’s commentary touches Dogecoin and other cryptocurrencies, and includes modern observations about speculators such as “I don’t know what the F- I’m doing”.
He said investors today were told they could “beat the professionals at their own game” but Graham wanted people to think differently.
“Most professional portfolio managers underperform the market average over time, so why would I want to play a game that the professional players lose at?”
Zweig said investors should use what Graham called their “basic advantage”.
This is outlined in chapter eight. “I’m paraphrasing, but the point is that you don’t have to sell because other people are selling, and you don’t have to measure your performance against how other people are doing,” Zweig said.
“Instead, you can measure your performance based on whether you are making progress towards your own personal financial objectives.
“If you play that game, you can stop worrying about what’s beeping on your phone, and the trading alerts you’re getting … you can stop worrying about what your neighbours or friends are buying or selling.”
Warren Buffett’s current wealth is eclipsed by just five people globally – tech barons Elon Musk, Larry Ellison, Jeff Bezos and Mark Zuckerberg plus the French owners of luxury goods empire LVMH Moet Hennessy Louis Vuitton.
Now aged 94, he typifies Graham’s teachings with: “the sillier the market’s behaviour, the greater the opportunity for the business-like investor. Follow Graham and you will profit from folly rather than participate in it.”
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Originally published as How The Intelligent Investor can teach you valuable lessons today
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