“The Intelligent Investor” is the classic book on “value investing,” long-term, analytical investing in undervalued growth stocks, and resisting the lure of short-term market trends. In other words: the strategy Warren Buffet (a student of Graham's at the time) used to build a fortune of more than $100 billion.
Particularly memorable is the allegory of Mr. Market, a trading representative who knocks on investors' doors day after day, offering to buy or sell shares in companies at sometimes plausible but often irrational prices.
Investors should be aware that the prices quoted by Mr. Market often do not reflect the real value of a company based on its fundamentals. Accordingly, one should not let Mr. Market drive one crazy, rather ignore him in most cases and move on. Because there's one thing that you can always count on: that he'll be back at the door the next day.
Graham published the first edition of his work in 1949 and has updated both stock market statistics and mathematical formulas for selecting undervalued stocks every five to six years – most recently in 1973.
While the basic principles of value investing are still relevant today, identifying undervalued companies is no longer something that simple formulas can model in the age of efficient, globally connected markets.
The current edition was updated in 2003 – when investors rediscovered value investing after the .com bubble burst – by financial journalist Jason Zweig to include easy-to-understand chapter summaries and facts and examples from today.
Despite its age, “The Intelligent Investor” is a foundational work that advanced investors should have read. For those new to the stock market, I would first recommend “The Psychology of Money”, published in 2021, which covers a similar range of topics but is written in a much simpler manner and is much more up-to-date.
🎧 Suitable as an audiobook? Due to the many numbers and statistics, I would recommend it more companionly to the printed book.
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