On my recent holiday, I had the opportunity to re-read The Intelligent Investor by Benjamin Graham. Some (one? two?) of you may recall that I reviewed it back in 2010 (I can’t remember) on a trip to Hawaii. Here is the original book review of The Intelligent Investor. It is such a big book it almost reads like a reference book (in fact, there is an index at the back of the book). I’m frankly surprised it took me another 5 years to re-read it again because as I read it again I felt like I got much more out of it the second time around (and perhaps five more years of personal finance and investing experience). I have been meaning to read this book again for about a year or so, but never found the time to, unfortunately.
As it managed to do the first time I read it, it was an eye-opener to the things I did know and the things that I still do not know about investing. Reading it a second time around, I learned even more than the first time. I learned that I am still not learning despite learning so much in the past few years on investing. I learned that picking your own stocks takes a lot of time, effort, knowledge, know-how, all of the things that I don’t really have or have been doing with my stock picks.
If you don’t know, Benjamin Graham was considered the greatest investment advisor of the 20th century. He was a value investor and taught Warren Buffett too.
What I Learned From Reading The Intelligent Investor…Again
I learned that it is best to be a defensive investor. I know I was being defensive, but I do not think I was being defensive.. enough.
I also again learned the things that you can control and you can’t control. As per The Intelligent Investor, you can control your brokerage costs, ownership costs, your own behaviour, and your risk. Most people want to buy when the going is good and sell when the going gets rough. I had my own experience with this with my preferred shares. When they tanked I was tempted to sell. Re-reading The Intelligent Investor reinforced that you really need a rational approach and a logical approach to investing. You have to be rational and logical when other people are not.
In addition, I was reminded me of the crash related to the tech stocks and how people and online/ Internet brokerages have increased the ability for a stock to get so hyped, that people buy without realizing the actual worth of the company.
It is All About the Principles, Baby
It is not about the Benjamins, but it is about the Benjamin Graham’s Principles… His principles, to always buy low and sell high, to not get caught up in the hysteria that is the Mr. Market, to not act on emotion or impulse when other people are, and to realize that no one cares more about your money than you do, are key takeaway points from the book that the investor can apply to his or her own personal finance situation.
Benjamin Graham said it is the character of the investor, the discipline, the patience, the interest in learning and the ability to control your emotions is the true intelligent investor, rather than someone that has a high IQ and high level of education.
What I Liked About The Intelligent Investor
What I liked about the book, other than the fact that it humbled me again like it did the first time I read it, I liked again the commentary by Jason Zweig, who helped simplify the occasional dense language that Benjamin Graham wrote and to relate it to recent, more current events (up to the 2005 edition, anyway). I also liked the multiple examples and references available when quoting anything (there was always some information to back it up). In addition, I liked the examples of companies and the application of the principles in the last few chapters of the book. It really guides you through the process on how to apply Graham’s principles to your own investing practice.
Readers, have you read The Intelligent Investor by Benjamin Graham?