The Intelligent Investor
By Benjamin Graham (Updated by Warren Buffet and Jason Zweig)
Originally Published in 1949 (This edition updated in February 2006)
Thibault’s Score: 3/5
The Intelligent Investor was originally published in 1949, but has been regularly updated every decade or so since. The result is that the original spirit of Benjamin Graham is there, at the bottom of the book, but the actual book I read recently is a mess of statistics and examples from a wide variety of disconnected decades.
I didn’t really like the Intelligent Investor that much. I thought that the advice was very much in the category of “do this do that” rather than a systematic explanation of concepts.
I was looking for a book that would tell me in depth what a stock and bond was, why people bought and sold them, and about the laws.
Instead of a descriptive work, this work is almost entirely prescriptive.
The book gives specific advice such as putting 75% of your money in stocks, and 25% in other instruments. It also gives vague advice like “don’t speculate.”
This book is great for average sophistication and intelligence people who have no idea what to do on the stock market with their life savings. It is essentially useless for people who just want to understand financial markets in greater depth.
That being said, there is good advice. Avoiding highly speculative investments, being conservative, and focusing on not losing rather than making big wins are all good to know. I like how he stresses to avoid the crowds.
This advice meshes well with the advice I’ve gotten from the many extremely rich and successful investors I’ve met.
However, some of his advice doesn’t mesh at all with what I’ve heard from the wise and successful.
For example, he advises against investing in industries that you are familiar with because you will enter the market with biases. This might be true for people who are doing things at a low level and have enough knowledge to be at the top of the Dunning-Kruger curve. However, this does not apply to people who are working at higher levels or as industry analysts. It also does not apply to people who have a pessimistic bias, only to those who have either an optimistic or greedy bias.
I recommend this book to anyone who is tempted by get rich quick schemes, but not to anyone else. Anyone who believes that ICOs, penny stocks, hot tech stocks, and amateur day trading will get them rich needs to read this book to disillusion them from their dangerous beliefs.
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