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The Intelligent Investor: The Definitive Book on Value Investing (平装)
by Benjamin Graham, Jason Zweig
| Category:
Investing, Value investing, Stock investing, Investment |
| Market price: ¥ 230.00
MSL price:
¥ 178.00
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| Stock:
In Stock |
MSL rating:
 Good for Gifts |
| MSL Pointer Review:
First published in 1934, The Intelligent Investor is an all-time classic on value investing. |
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AllReviews |
1 Total 1 pages 8 items |
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Warren Buffet (MSL quote), USA
<2006-12-28 00:00>
By far the best book on investment ever written. |
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Andrew Tobias (MSL quote), USA
<2006-12-28 00:00>
There have been other good books written about money since 1841, but only a few hold up. The best known and most likely to make you money is The Intelligent Investor. |
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John Train (Author of The Money Masters) (MSL quote), USA
<2006-12-28 00:00>
Graham ranks as this century's (and perhaps history's) most important thinker on applied portfolio investment. |
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L. Masonson (MSL quote), USA
<2006-12-28 00:00>
When I first came across the first edition of this book in my local library in 1959, I was a teenager. Back in those days there were only a handful of books about the stock market. And I've read all of them during my junior high and high school years.
This latest updated 623-page paperback (the index alone is 33 pages) version updated by Jason Zweig is a welcome addition to this classic. The original chapters are intact, but with footnoted comments by Zweig. Moreover, he provides his own commentary on each chapter contents in a separate chapter following each original chapter. He provides extensive research, charts, tables and commentary that updates the book to the present years. He is not afraid to take on the big guns of Wall Street and show how wrong they were in some of their extremely bullish predictions during January-March 2000, when the market was at its peak.
The first nine chapters cover investing basics that all investors could benefit from. There are many truisms spouted on Wall Street that are not really true. These chapters provide the investor with a realistic picture of how Wall Street works and what investors need to do to come out ahead.
Chapters 10-20 focus strictly on fundamental analysis, stock selection, convertible issues and warrants, and other subjects. Investors who plan to invest directly in stocks should make sure to read these chapters. However, for readers more interested in investing in mutual funds, and in particular index funds, they need not concern themselves with all the detail in these chapters unless they have the time or interest in the subject matter presented.
In conclusion, the combination of pioneer Ben Graham’s original work coupled with Zweig’s meticulous and enjoyable update, make this a remarkable book about investments and investor behavior that every new and experienced investor should read. Of the 500 investing books that I’ve read, this one certainly is one of the greats of all time. |
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Mingus (MSL quote), USA
<2006-12-28 00:00>
Graham's writing is clear, concise and level-headed. He warns against unreasonable financial expectations and proceeds to explain his theories in sufficient detail to be worthwhile, without being over the comprehension of the layman interested in investing.
The book is lengthy and "solid", as opposed to other finance books that hope to explain investment in 100-200 pages. Topics include stocks vs. bonds, inflation, security analysis, and margin of safety (Graham's analysis of the assets of a company in relation to its debt). Zweig's commentary is useful, with footnotes to clarify historical references and, occasionally, demonstrate instances where Graham's predictions proved untrue. At the end of each chapter, Zweig uses recent (up to early 2003) examples of Graham's concepts to make things clearer to modern readers. (Graham's text itself is his 1973 revision to the original 1949 edition.) Also helpful are numerous references to online articles at various sites (I cannot yet vouch for these links' present state.)
Based on my understanding, I highly recommend this edition to anyone interested in this book. I feel that I gleaned more from this annotated edition than I would have from the original, without having to conduct additional research.
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Scott Storkamp (MSL quote), USA
<2006-12-28 00:00>
This book is light reading compared to Ben Graham's seminal tome, Security Analysis. It's easier to read, and shorter. It's also more up to date. Highly recommended for investors of any stripe, value or growth. The appendix, from Warren Buffett's speech at Columbia University is particularly entertaining, as he debunks academia's love affair with efficient market theory. Jason Zweig, an obvious Graham disciple, does a fantastic job bringing the book's principles to life through modern examples. The only grating thing is his constant derision of brokers or anyone that actually gets paid to manage money. (full disclosure: I'm an analyst now and was a broker for 10 years).
Ben Graham clearly invested in the stock market during a period of hustlers, crooks, crashes, and frauds. Brokers, investment bankers and analysts back then were not much more than fast-talking salesmen. Wait a minute, that sounds just like the way things are today on Wall Street! Things may not have changed as much as we would like to think. Due to his travails as an investor in difficult markets, Ben Graham's investment style evolved into a systematic, logical approach which became the basis for value investing. In "The Intelligent Investor", Graham lays out the foundation of value investing by three introducing key principles: the idea of "Mr. Market", a value-oriented disciplined approach to investing, and the "margin of safety" concept.
"Mr. Market."
The stock market on a daily basis resembles a casino, only without the comfort of free cocktails. Watching the stock ticker is like having a business partner that is totally schizophrenic; Graham calls him "Mr. Market." One day he loves the business and wants to pay a ridiculous price to buy out your half. The next day, all hope is lost, and he wants to sell you his portion for pennies on the dollar. Graham argues that this daily liquidity is an advantage that most investors turn against themselves: (p. 203) "But note this important fact: The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all; for he would then be spared the mental anguish caused him by other persons' mistakes of judgment." This is profound. It's not a question of whether our stocks will drop; they will: the trick is how we respond to that eventuality.
Ben Graham's Stock selection for the defensive investor. Graham lays out some important characteristics of "value" stocks. (p. 348). Some of the metrics are dated, but the principles are still valid. Even deep value investing today would seem like GARP investing to Ben Graham. Investors are now more focused on future earnings than they were in his day, and valuations reflect that. Graham recommends:
1. Adequate size of the enterprise (>$100M revenue, old figure)
2. Sufficiently strong financial condition (2:1 current ratio)
3. Earnings stability (some earnings every year last 10 years)
4. Dividend record (uninterrupted payments for at least 20 years)
5. Earnings growth (1/3 increase in per share EPS past 10 years)
6. Moderate price/earnings ratio (P/E < 15x average last 3 years EPS)
7. Moderate ratio of price to assets (price/book < 1 1/2 times)
8. Overall stock portfolio, when acquired, should have an overall earnings /price ratio- the reverse of the P/E ratio - at least as high as the current high-grade bond rate. A P/E no higher than 13.3 against an AA bond yield of 7.5%
Margin of Safety as the central concept of value investing.
This is an investment rule that was written by a man who had been deeply bruised by bear markets. I believe he came up with this by learning from his losses. When the market turns into a storm of feces, like it inevitably will, if the stock has no earnings to rely on, you have nothing to grab onto. You can't make yourself stay in the stock when the price is down. Graham says: (p. 515) "The margin of safety is the difference between the percentage rate of the earnings on the stock at the price you pay for it and the rate of interest on bonds, and that is to absorb unsatisfactory developments". Furthermore he writes: (p. 518) "The buyer of bargain issues places particular emphasis on the ability of the investment to withstand adverse developments. " You can and will still lose money in the market with value-oriented investing, but according to Graham: (p. 518) "The margin guarantees only that he has a better chance of profit than for loss-not that loss is impossible."
Conclusion: So that's it, those are the three basic points of the book, but you should still buy it and read it, it's a very enjoyable experience, Shakespeare for the investing crowd. Despite being a realist, Ben Graham wasn't a total pessimist. Late in the book Graham makes a point that is one of my favorites: (p. 524) "A fourth business rule is more positive: "Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it- even though others may hesitate or differ. You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right. Similarly, in the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand. " |
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Josh Golla (MSL quote), USA
<2006-12-28 00:00>
Benjamin Graham is called the "Father of Value Investing." He published The Intelligent Investor in 1949, and today that book is a classic. I particularly enjoy this edition because Warren Buffet writes the foreword. Buffet was a protégé of Graham's at Columbia and calls The Intelligent Investor "The greatest book on investing ever written."
Graham uses the allegory "Mr. Market", a person who offers daily to buy or sell shareholder stock at varying prices. Sometimes the price quote is reasonable, often it is not. The shareholder must decide to agree, disagree, or ignore "Mr. Market". This allegory conveys the idea that a shareholder need not regard the often nonsensical market price valuation for companies, and rather focus on P/E ratio and company performance.
The Intelligent Investor is an incredibly well-written book, with many insights for modern investors. |
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Henry Bee (MSL quote), USA
<2006-12-28 00:00>
When it comes to the subject of investment, one cannot speak about it without mentioning the household name, Warren Buffett. After all, this is a man who had made himself the second richest man in the world solely by investing money in companies. It is through learning more about Buffett that lead me to Benjamin Graham and his investment classic, The Intelligent Investor. In this 2003 updated edition, supplementary commentaries and footnotes were added throughout the book by Jason Zweig, a senior writer at Money magazine. This updated edition offers a fresh look at an investment classic, and convinces the reader that the book is still relevant 33 years after Graham's last revision.
Let me begin then with an observation. Nowadays, just about everybody who has worked a day job knows about putting their money in the stock market. There are some who does it out of greed, some out of fear, but the vast majority does it just because everybody else is doing the same thing! It appears to me that only a tiny group of minorities are really making intelligent investment decision. What about the rest? They buy/sell when they feel like it. Emotion is their chief investment advisor, and they listen to it religiously. Is it any wonder that the financial market behaves the way it does? Good news, because one will learn from Graham that the sillier the market's behavior, the greater the opportunity for the business-life investor.
Graham begins by laying out the foundational definition of investment versus speculation. "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative." In the following chapters, Graham gives his readers unprecedented access to the stock market history and grants readers the wisdom that are used in developing portfolio policies in the body of the book. Graham's book attempts to inject some transparency into the secret world of finance and he has succeeded abundantly.
The final and most important chapter of this book sums up the secret of sound investment into three words, MARGIN OF SAFETY. To quote, "The margin of safety is always dependent on the price paid. It will be large at one price, small at some higher price, nonexistent at some still higher price."
The Intelligent Investor isn't a book about analyzing companies, but one which really nails into the readers' heads the proper investment principles and attitudes. Professor Graham's academic writing style delivers his powerful ideas in a simple and gentle way.
To summarize, in the added appendix of the book is an article called Superinvestors of Graham of Doddsville written by Buffett, "There seems to be some perverse human characteristic that likes to make easy things difficult... Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham & Dodd will continue to prosper." |
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1 Total 1 pages 8 items |
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