The Intelligent Investor

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dreamreality2013
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The Intelligent Investor

Post by dreamreality2013 » Sat May 14, 2016 7:24 am

The Intelligent Investor by Benjamin Graham is on sale for Amazon Kindle today for $2.99.

Does anyone know if this is a good book that falls in line with boglehead thinking? It seems like a great deal, but I don't want to buy something if it's all about how to pick great stocks or other concepts I'm not interested in.

livesoft
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Re: The Intelligent Investor

Post by livesoft » Sat May 14, 2016 7:26 am

It is how to pick great stocks. It is a good book, but you had better have some fortitude or you may be leaving the Boglehead herd.
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RVosen
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Re: The Intelligent Investor

Post by RVosen » Sat May 14, 2016 7:39 am

It had some really good chapters, we'll worth 2.99. Even though I'm not a stock picker, it gave me some good incite on what can affect the market.

tm3
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Re: The Intelligent Investor

Post by tm3 » Sat May 14, 2016 10:32 am

I would recommend reading it as it is one of the "classics" and as such imo helps in developing a broad overview of investing.

As far as a "how to," not so much.

bawr
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Re: The Intelligent Investor

Post by bawr » Sat May 14, 2016 10:51 am

dreamreality2013 wrote: Does anyone know if this is a good book that falls in line with boglehead thinking?
Grahams advice for what he describes as the "Defensive Investor" is very much aligned with the Boglehead philosophy. He prescribes an entirely different course of action for the "Enterprising Investor", however.

From the book:

It has been and old and sound principle that those who cannot afford to take risks should be content with a relatively low returns on their invested funds. From this there has developed the general notion that the rate of return on which the investor should aim for is more or less proportionate to the degree of risk he is ready to run. Our view is different. The rate of return sought shold be dependent, rather, on the amount of intelligent effort the investor is willing and able to bring to bear his task. The minimum return goes to our passive investor, who wants both safety and freedom from concern. The maximum return would be realized by the alert and enterprising investor who exercises maximum intelligent and skill.

happenstance
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Re: The Intelligent Investor

Post by happenstance » Sat May 14, 2016 12:33 pm

The Intelligent Investor was the first book on investing I read, and as others have noted, it does require some amount of fortitude to get through (I have 21 pages of notes/highlights from this book!). It is definitely in line with Bogleheads philosophy and I credit the book to turning me onto it. While much of the book discusses individual stock selection (and how to value them), it is a decent introduction into how markets operate, core principals of investing, and the basics of portfolio construction. But more than anything, the book tries to instill good behavior for investors. Some highlights from my notes:
The intelligent investor must never forecast the future exclusively by extrapolating the past.

There are two ways to be an intelligent investor: by continually researching, selecting, and monitoring a dynamic mix of stocks, bonds, or mutual funds; or by creating a permanent portfolio that runs on autopilot. [...] No one has yet discovered any other formula for investing which can be used with so much confidence of ultimate success, regardless of what may happen to security prices, as Dollar Cost Averaging.

The ideal way to dollar-cost average is into a portfolio of index funds, which own every stock or bond worth having. That way, you renounce not only the guessing game of where the market is going but which sectors of the market— and which particular stocks or bonds within them— will do the best.

Buying funds based purely on their past performance is one of the stupidest things an investor can do.

An index fund— which owns all the stocks in the market, all the time, without any pretense of being able to select the “best” and avoid the “worst”— will beat most funds over the long run.

Hold an index fund for 20 years or more, adding new money every month, and you are all but certain to outper-forms the vast majority of professional and individual investors alike.
If I could go back and do it again, I'd rather start with Bernstein's The Four Pillars of Investing, simply because it's more accessible. But The Intelligent Investor is a good read, especially at that price.

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Rick Ferri
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Re: The Intelligent Investor

Post by Rick Ferri » Sat May 14, 2016 12:40 pm

dreamreality2013 wrote:The Intelligent Investor by Benjamin Graham is on sale for Amazon Kindle today for $2.99.

Does anyone know if this is a good book that falls in line with boglehead thinking? It seems like a great deal, but I don't want to buy something if it's all about how to pick great stocks or other concepts I'm not interested in.
Don't let that dissuade you from learning! It really doesn't matter if this or any book by a great investor falls in line with Boglehead thinking. You'll always get something useful out of it. I''ve read dozens of books written by active managers and learned something new from them all.

Rick Ferri
The Education of an Index Investor: starts in darkness, finds enlightenment, overcomplicates everything, accepts simplicity.

dreamreality2013
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Re: The Intelligent Investor

Post by dreamreality2013 » Sat May 14, 2016 12:41 pm

happenstance wrote:
If I could go back and do it again, I'd rather start with Bernstein's The Four Pillars of Investing, simply because it's more accessible. But The Intelligent Investor is a good read, especially at that price.
I've already read the Four Pillars as well as Investor's Manifesto, Boglehead's guide to investing, Coffeehouse, and Common Sense on Mutual Funds. Currently reading A Random Walk Down Wall Street. I'm wondering if this book will add much to that assortment.

magneto
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Re: The Intelligent Investor

Post by magneto » Sat May 14, 2016 1:00 pm

dreamreality2013 wrote:
I've already read the Four Pillars as well as Investor's Manifesto, Boglehead's guide to investing, Coffeehouse, and Common Sense on Mutual Funds. Currently reading A Random Walk Down Wall Street. I'm wondering if this book will add much to that assortment.
Starting from having read 'The Four Pillars', then if pushed to limit the choice to two further books, current favorites are :-
1. Ben Carlson 'A Wealth Of Common Sense'
2. Frank Armstrong 'The Informed Investor'
Both, but esp the first could bring fresh thinking, the second includes amongst much else, rational advice on how to prepare a portfolio for retirement.

Some of the otherwise excellent books recommended here, manifest the irritating tendency for the authors to bang on about Active v Passive, for chapter after chapter, ad nauseum. One chapter would suffice to get the point across!

Benjamin Graham had this thoughtful advice to say in The Intelligent Investor :-
"Since common stocks, even of investment grade, are subject to recurrent and wide fluctuations in their prices, the intelligent investor should be interested in the possibilities of profiting from these pendulum swings. There are two possible ways by which he may try to do this : by way of TIMING and the way of PRICING. By timing we mean the endeavour to anticipate the action of the stock …… . By pricing we mean the endeavour to buy stocks when they are below their fair value and to sell them when they rise above such value. … We are convinced that the intelligent investor can derive satisfactory results from pricing …. We are equally sure that if he places his emphasis on timing, in the sense of forecasting, he will end up a speculator and with a speculator’s financial results This distinction may seem rather tenuous to the layman, and it is not commonly accepted in Wall Street."

This last advice elicits mixed responses from the BH community!
'There is a tide in the affairs of men ...', Brutus (Market Timer)

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Robert T
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Re: The Intelligent Investor

Post by Robert T » Sat May 14, 2016 2:36 pm

.
The more I read, the more I like Ben Graham, perhaps even more so than Buffet, as IMO Ben Graham’s approach - primarily focused on price relative to liquidation value (“cigar buts”) is easier to implement than Buffet’s - primary focus on selecting wonderful companies (at a fair price).

Graham’s approach is arguably more accessible by individual investors, as most Graham-type stocks are smaller cap with low capacity, and out of reach of active managers due to the needed threshold minimum fund/ETF assets under management for profitability to keep the fund open. In this respect ‘individual’ investors have an advantage. Or put another way, for those investors, who for some reason want to pick their own stocks - a Ben Graham type approach can increase the odds of success.

The vast majority of individual investors, IMO, should focus on asset allocation rather than individual stock selection - and for this, "The Intelligent Asset Allocator (Bernstein)" is a good place to start rather than "The Intelligent Investor", but would still keep the latter on the reading list.

Robert
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Taylor Larimore
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"The Intelligent Investor" -- A Gem

Post by Taylor Larimore » Sat May 14, 2016 2:46 pm

Bogleheads:

Jason Zweig has written a superb book which includes the full 1973 edition of "The Intelligent Investor" by Benjamin Graham together with Jason's explanation and commentary. These are excerpts for mutual fund investors:
"Graham was not only one of the best investors who ever lived; he was also the greatest practical investment thinker of all times."

"The one risk no investor can ever eliminate is the risk of being wrong."

"The investor's chief problem--and even his worst enemy--is likely to be himself."

"The majority of investment funds, even with all their experienced personnel, have not performed so well as the general market."

"Everyone must keep some assets in the riskless haven of cash."

"It is no difficult trick to bring a great deal of energy, study, and native ability into Wall Street and to end up with losses instead of profits."\

"By speculating instead of investing, you lower your own odds of building wealth and raise someone else's."

"One thing that never suffers a bear market on Wall Street: dopey ideas."

"The case for investing in a REIT fund is weaker if you own a home."

"Allocating at least 10% of your retirement assets to TIPS is intelligent."

"Never forecast the future exclusively by extrapolating the past."

"The only indisputable truth that the past teaches us is that the future will always surprise us--always!"

"The worse the future looks, the better it usually turns out to be."

"The primary cause of failure is that investors pay too much attention to what the stock market is doing currently."

"The key to rebalancing is having a predictable schedule"

"The people who now claim that the next 'sure thing' will be health care, or energy, or real estate, or gold, are not more likely to be right in the end than the hypesters of high tech turned out to be."

"The intelligent investor (unless in the advanced stage of retirement) dreads a bull market, since it makes stocks more costly to buy."

"The future of security prices is never predictable."

"The investor may vary his holding of common stocks between the 25% minimum and the 75% maximum."

"For most investors, intermediate bonds are the simplest choice, since they enable you to get out of the game of guessing what interest rates will do."

"For most investors, bond funds beat individual bonds hands down."

"In most cases, the high expenses of owning an annuity will overwhelm its advantages."

"Selectively adding stocks to an all-bond portfolio can increase its income yield--and raise its potential return."

"Beginning in 1949, the average annual return produced by stocks over the previous 20 years was 3.1%, versus 3.9% for long-term Treasury bonds."

"If you had invested $1 in U.S. stocks in 1900 and spent all your dividends, your portfolio would have grown to $198 by 2000. But if you had reinvested all your dividends, your portfolio would have been worth $16,797." (Stock indexes do not include dividends.)

"It is essential that (the intelligent investor) entrust himself only to firms of the highest reputation."

"The one thing the widow must not do is to take speculative chances in order to 'make some extra income.'"

"We urge the beginner in security buying not to waste his efforts and his money in trying to beat the market."

"A permanent autopilot portfolio, can defend you against the need to dedicate a large part of your life to stock picking."

If you find yourself trading more than twice a year--or spending more than an hour or two per month on your investments--then something has gone badly wrong."

"A defensive investor runs and wins the race by sitting still."

"Your very refusal to be active, and your renunciation of any pretended ability to predict the future, can become your most powerful weapons."

"The ideal way to dollar-cost average is into a portfolio of index funds, which own every stock or bond worth having."

"If you started investing $100/month in September 1929, your money would have grown to $15,571 by August 1939. That's the power of disciplined buying--even in the worst bear market of all time."

"The knowledge of how little you can know about the future, coupled with the acceptance of your ignorance, is an investor's most powerful weapon."

"Alan Greenspan said on January 7, 1973: "It's very rare that you can be as unqualifiedly bullish as you can now." (1973 and 1974 turned out to be the worst years for the stock market since the Great Depression.)"

"For most investors, market timing is a practical and emotional impossibility."

"If and when trouble should come, the owner of foreign obligations has no legal or other means of enforcing his claim."

"A junk-bond fund is only a minor option--not an obligation."

"The more you trade, the less you keep."

"A great company is not a great investment if you pay too much for the stock."

"Investing in foreign stocks may not be mandatory, but it is definitely advisable."

"Every investor who owns common stocks must expect to see them fluctuate."

"The intelligent investor is likely to need considerable will power to keep from following the crowd."

"Nothing important on Wall Street can be counted on to occur exactly as it happened before."

"It is virtually impossible to make worthwhile predictions about the price movements of stocks, it is completely impossible to do so for bonds."

"There's no reason you can't do as well as the pros."

"Investing isn't about beating others at their game. It's about controlling yourself at your own game."

"The single best choice for a lifelong holding is a total stock-market index funds."

"Neuroscience shows that our brains are designed to perceive trends even where they might not exist."

"Selling into a bear market can make sense if it creates a tax windfall."

"We would hazard a guess that the average individual who put his money exclusively in fund shares in the past 10-years has fared better than the average person who made his common-stock purchases directly."

"It is probably too much to expect that the urge to speculate will disappear."

"Buying funds based purely on their past performance is one of the stupidest things an investor can do."

" Looking back from December 31, 2000, how may U.S. stock funds outperformed Vanguard 500 Index Fund? 3-years (59.5%); 5-years (51.4%); 10-years (31.2%); 15-years (28.1%); 20-years 14.9%)."

"Graham praised index funds as the best choice for individual investors, as does Warren Buffett."

"Mutual funds, on average, underperform the market by a margin roughly equal to their operating expenses and trading costs."

"One of the most common myths in the fund business is that 'you get what you pay for'."

"By selling when a style of investing is out of fashion, you not only lock in a loss but lock yourself out of the all-but-inevitable recovery."

"Patience is the fund investor's single most powerful ally."

"It is almost as difficult to select satisfactory lay advisers as it is to select proper securities unaided."

"Just as there's no reason you can't manage your own portfolio, so there's no shame in seeking professinal help."

"Perhaps their (investment advisors) chief value to their clients lies in shielding them from costly mistakes."

"The investment world has enough liars, cheaters, and thieves to keep Satan busy."

"In 44 years of Wall Street experience and study, I have never seen dependable calculatons made about commons-stock values--that went beyond simple arithmetic or the most elementay algebra."

"The current price reflects both known facts and future expectations."

Researching and selecting your own stocks is not necessary; for most people, it is not even advisable."

"Covering your downside is never worth surrendering most of your upside."

"It is high time corporations thought about modernizing their major financial practices, not the least important of which is their dividend policy."

"To distill the secret of sound investment into three words--margin of safety."

Wall Street proverb--"A bull may make money, a bear may may make money, but a hog never makes money."

"Good profit possibilities combined with small ultimate risk is no longer available."

Diversification is an established tenet of conservative investments."

"There are several different ways to make and keep money in Wall Street."

"Uncertainty and investing are synonyms."

"To be an investor, you must be a believer in a better tomorrow."

"There seems to be some perverse human characteristic that likes to make easy things difficult."

"The more elaborate and abstruse the mathematics the more uncertain and speculative are the conclusions."

"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks."
Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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abuss368
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Re: The Intelligent Investor

Post by abuss368 » Sat May 14, 2016 5:58 pm

dreamreality2013 wrote:The Intelligent Investor by Benjamin Graham is on sale for Amazon Kindle today for $2.99.

Does anyone know if this is a good book that falls in line with boglehead thinking? It seems like a great deal, but I don't want to buy something if it's all about how to pick great stocks or other concepts I'm not interested in.
Hi dreamreality2013,

This is an investment classic and the one book that Warren Buffett always talks about. For $2.99, it will be money well spent.

Best.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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iceman99
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Re: The Intelligent Investor

Post by iceman99 » Sat May 14, 2016 6:03 pm

I almost purchased it yesterday for $13.99. Glad I didn't...

purpleKatz
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Re: The Intelligent Investor

Post by purpleKatz » Mon Apr 02, 2018 11:33 pm

Electronic version on sale again for $2.99
Available at Amazon/GooglePlay/Itunes

mrpotatoheadsays
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Re: The Intelligent Investor

Post by mrpotatoheadsays » Tue Apr 03, 2018 12:13 am

Best book ever.

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