Benjamin Grahams last line in The Intelligent Investor sums up the entire book in his trade-mark common-sense way: To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks. Graham is very clear form the start that he is not writing for speculators but for the layman who wants to have a sound approach to grow his weath steadily. Graham chastises average investors for their sloth and ignorance, for willingly giving up their responsibility and rights as business owners to management. Ultimately, it is important for investors to give themselves a margin of safety by buying a stock at a price that is lower that its appraised value and to diversify the portfolio. What The Intelligent Investor does is that it lays the foundation for laymen by giving a sound approach to investment, written with common sense and simplicity.
3) But don't buy SIMPLY because the company is cheap; look for EPS growth ideally > 30% (cumulative) over the course of the prior 10 years. 6) Don't invest in companies that have had negative earnings-per-share in the last three years. Sadly "C" and "D" are not feasible for the rest of us, but between Buffett and Graham the small-time investor has about all he/she needs in order to at least not get hosed!
OK, the recent stock market drops scared me. Now is a great opportunity to pick up value stocks that have dropped a bunch.
I read this book to learn Graham's general investing advice and opinion of the market, not to learn his formulas for analyzing the values of stocks and bonds. "To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." "The real money in investing will have to be made - as most of it has been in the past - not out of buying and selling, but out of owning and holding securities, receiving interest and dividends, and benefiting from their long-term increase in value." Notes Graham divides investors into 2 camps: defensive and enterprising. The enterprising investor is more risk-tolerant, willing and able to analyze stocks and bonds to find higher returns. Defensive portfolio 25-75% US bonds, depending on investor's risk tolerance and situation common stocks of "leading" or "prominent" US companies (blue chips), purchased at a reasonable price based on historical data Enterprising portfolio buy low, sell high growth stocks value stocks take advantage of "special situations" like mergers and acquisitions, business reorganizations, etc. Risk vs safety Risky investments are those that have a chance of declining in price, but a history of positive returns.
Okay, this is the book to read if you are serious about investing in stocks. Benjamin Graham's "value investing" method is the time-tested "choose 'em carefully and hold 'em" long-term strategy used by Warren Buffett. Most of it is about how to analyze the actual long-term value of a stock, which means diving deep into company financial statements.
Because their choices were made based on intrinsic value and not market prices, these companies are good long term investments and the investor doesnt have to sell and buy new ones constantly.
It's not that I wouldn't advise anyone to read The Intelligent Investor, it's just that if you don't have the time to plod your way through Graham's outdated details, either skip straight to the commentary, or check out Malkiel's book.
Maybe if you know nothing about the stock market, then this book is for you to get an idea of what you are getting into and what to expect. This way you buy more when cheap and less when expensive -You cannot beat the market even if you are an active investor. Some notes from chapter 11-16: Estimating value of a stock: future earnings. For public utilities the debt should not exceed twice the stock equity (at book value). -Price of stock no more than 112 times net asset value. -Price no more than 15 times average earnings of the past three years.
I just can't imagine that this book worth nearly $22. This book is just rubbish and the author is really stupid.
Disciples of value investing include Jean-Marie Eveillard, Warren Buffett, William J.