The intelligent investor is a book that describes the start of, and current mechanics of market conditions and how any investor can and should behave accordingly. In broad lines, the writer Benjamin Graham outlines the different types of investors and how really only one method has seen consistent success through decades.
About Benjamin Graham & Jason Zweig
Benjamin Graham is known as the greatest investment advisor of the twentieth century. His focused investing philosophy defines as value investing for the long term, has made him and this book a popular read since 1949.
The book has undergone numerous adjustments since then and a second author by the name of Jason Zweig has updated certain principles whilst elaborating on others that still remain relevant today.
The intelligent investor summary
How do you become an intelligent investor? The described virtuous from the author include being patient, disciplined, and eager to learn; you must also be able to harness your emotions and think for yourself.
Something that appears rather obvious, but can be a challenge to do consistently. Hence, the importance of understanding market behaviour, and the appropriate response.
Chapter and section highlights
Below several key insights and section summaries are provided to get a more thorough understanding of the book in advance.
The aim
To help minimize the risk that (new) investors might experience when investing in the stock market. The approach mentioned is set on long term gain and is often risk-averse. The writer believes in data over (public) opinion. Graham, therefore, uses past and present indicators and research, rather than belief or hope.
Stock market history
Many beginning investors fall for common ‘traps’ that can lead to more harm than good when investing. The main 4 discussed are:
- Buying a stock when everyone is already heavily talking about said stock (no more than hype)
- Foregoing doing your own research
- Rely on opinions or recommendations from questionable expertise
- Keeping a levelled mind when your portfolio is performing great
Stocks and Inflation
Research has shown stocks have a tendency to outpace inflation 80% of the time. However, individual stocks react badly when high inflation occurs. It is therefore a good choice overall during inflationary times, but a risky one when inflation hits high numbers.
REITs and inflation
A safer investment when considering inflation, are REITs. A real estate investment trust (REIT) are companies that own or rent outbuildings to other organizations or individuals. A reit can also be more thematic in nature, meaning you could buy a specific medical REIT, if you are diversifying your portfolio.
Age and investing
Age should not play a definitive role in investing. Although you could arguably invest shorter if you start later in life, investing for a longer time period is worth it in almost every single case. The writer is of the opinion investing is more about determining your available time and risk appetite, than anything else.
Prior to investing, ask yourself the following:
- Are you single or married?
- Does your partner work, and how much money do they earn?
- Do you have children?
- If not, do you want children? When will high costs, such as college education, kick in?
- Will you inherit money at some point? Or, will you have to spend money keeping a parent in a care home?
- Is your job secure?
- If you are self-employed, how long do similar companies generally survive?
- Do you need your investments to supplement your cash income for you to survive? If so, you should have more money in bonds.
- How much money can you afford to lose on investments?
This hasn’t even covered half of the insights Graham shares with his readers. However, InvestingReviews also wants you to enjoy the book and therefore leaves the remainder to be discovered on your own terms.
The intelligent investor words of wisdom
Take several of the below’s quotes and rewritten points as the tip of the iceberg when it comes to knowledge this book will provide you with:
It has long been the prevalent view that the art of successful investment lies first in the choice of those industries that are most likely to grow in the future and then in identifying the most promising companies in these industries.
Final verdict
The intelligent investor receives 4.5 stars from InvestingReviews thanks to its soft introduction and provided background information that would otherwise leave many new investors confused. As a standalone book, it will not teach you all you need to know, but it is a good beginning for a new investor. Readers agree with an overwhelming 25.000 plus reviews averaging 4.5 stars as well.
Amazon is selling the intelligent investor for a reasonable price in the form of Kindle, audiobook or paperback. There is also a possibility of buying 2 other books that are very relevant to this topic, called The little book of common sense investing and A beginner’s guide to the stock market, should you feel in the reading mood.
If you are ready for another review, then continue reading here.
If you are an investor or considering becoming one, then yes. Read more on this page to find out what the book can offer.
The Intelligent Investor is a book written by Benjamin Graham that aims to inform investors about value investing.
Yes, The Intelligent Investor has proven to keep its relevance throughout time. Several sections have been updated to ensure it kept up to date too.
Yes, The Intelligent Investor is considered a good book by critics and readers according to Amazon.
The Intelligent Investor goes through many different topics in regards to investing. On this page, you can find a review to understand if the book is for you.