Ben Graham was born in London in 1894 and he passed away at the age of 82, in 1976. He is a matchless investment manager and a surpassing financial educator. He is the author of many classic writings that have no match in the world if investing. He is the pioneer of security analysis and value investing. His career was marked by working for Newburger, Henderson & Loeb, and later at Graham – Newman Corporation.
Many professional investors hold his books the best for stock market. Two of many titles that exalt him from the crowd are “Security Analysis” written in 1934, and “The Intelligent Investor” published in 1949. Even now, those two books are being considered as a must read, and they are used literature at the universities. Ben Graham is regarded as the most influential analyst of applied portfolio investment. He is known for teaching Warren Buffet and many others famous and successful investors, which demonstrates his ability to pass on the knowledge, and not just to present the ways and methods of his work.
Ben Graham migrated to New York with his family when he was just a twelve months old baby. When his father died eight years later, his life became preoccupied with financial problems. He got a job as a messenger at a Wall Street company “Newburger, Henderson & Loeb”, after graduating from Columbia University in 1914. In just 6 years he became a partner in the company. After 6 years, he founded a company together with Jerome Newmand. His work until his retirement was teaching at Columbia University about finance. During the Great Depression, Ben Graham bankrupted, but he successfully revived his financial status very soon after that. Ben Graham explains his investing style in his book “The Intelligent Investor”, but in short, the basics of his investing methods are that an investment needs to be bought for the less of its actual value. “Margin of safety” is the phrase that he uses to describe how an investor should find what to invest into. That means that an investor should find a company whose value is temporarily low, but that the company has got a bright future. So the “Margin of safety” is the difference between the real value of a company and the price (lower than real value) that the company is to be bought for. Lover the price in comparison to the real value is – the better. He was a firm believer that the market price of a stock is never the same with the real value. He explained that Mr. Market – as he called it – will always have the value of the stock prices changing, and how that is an opportunity for wise investors to buy something for a lower price than its real value is and to sell it when the price gets a greater value. He pointed out how following the crowd needs to be avoided, and the lower priced stocks needs to be searched for.
Benjamin Graham Quotes
If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.
Finance has a fascination for many bright young people with limited means. They would like to be both intelligent and enterprising in the placement of their savings, even though investment income is much less important to them than their salaries. This attitude is all to the good. There is a great advantage for the young capitalist to begin his financial education and experience early. If he is going to operate as an aggressive investor he is certain to make some mistakes and to take some losses. Youth can stand these disappointments and profit by them. We urge the beginner in security buying not to waste his efforts and his money in trying to beat the market. Let him study security values and initially test out his judgment on price versus value with the smallest possible sums.
Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.
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.
The underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in the financial mechanisms and climate.
Security Analysis, ISBN 978-0-07-159253-6
The Intelligent Investor
Storage and Stability: A Modern Ever-normal Granary, New York: McGraw Hill. 1937 ISBN 0-07-024774-9
The Interpretation of Financial Statements
World Commodities and World Currency, New York & London, McGraw-Hill Book Company. 1944 ISBN 0-07-024806-0
Benjamin Graham, The Memoirs of the Dean of Wall Street (1996) ISBN 978-0-07-024269-2
Interesting fact from Ben Graham wikipedia page :
Graham’s most famous student is Warren Buffett. According to Buffett, Graham said that he wished every day to do something foolish, something creative, and something generous. Buffett said that Graham excelled most at the last.Some of Graham’s most famous disciples, who have drawn on the works of several Columbia Business School alumni, many of whom were direct disciples of Benjamin Graham himself, include famous Value Investors such as Warren Buffett, Charlie Munger, Philip Fischer, Walter Schloss, Peter Lynch, John Templeton, Mohnish Pabrai, Amit Ayare, Whitney Tilson, Prem Watsa, Lauren Templeton, Jerome Chazen and many more.