The Intelligent Investor

The Intelligent Investor is a book on Investment management by Benjamin Graham .

Acquiring the book

Even though i read a lot about this book, it was unavailable in Singapore libraries or anywhere else, i.e until it was republished by HarperCollins. I could read it only in 2005, by paying the full price of SGD 35 for the paperback edition at Kinokuniya ↗ , which was a first for me. All my life, i.e until i purchased this book, i always paid cents on the dollar by buying used books or borrowing from libraries like NLB or buying low cost or subsidized publications. The book purchase was justified as a birthday gift.

In later years, I bought multiple used copies of the book and gifted them to friends. In early 2016, i also bought a kindle version of the book at a sale price of ₹99.

First Impressions

I was thrilled to see the words “by far the best book on investing ever written” by Warren Buffett on the book cover.

When i read the chapter 20 of the book, i could immediately see the logic expounded by the author on the “Margin of Safety” concept and the caution about not overpaying.

The accompanying commentary by Jason Zweig, a gifted financial journalist, was easier to relate to, as my investment journey started around Mar'2003 and my the then employer went through the cycle of boom and bust.

Even though in the preface of the book, Buffett highlighted about the intellectual power of Graham, i was awestruck by the ingenuity of the author when i read about Mr. Market in chapter 8.

Until i read this book, i was still taking baby steps in my investment journey, unsure of every step. This book gave me the confidence and necessary reasoning to continue with my approach.

Even though some chapters can require some effort from the reader to understand and follow the numbers, the educational value is worth it. The expected mathematical knowledge is not beyond high school level.

Investment lessons

The true investor, who owns a listed common stock, has the option to take advantage of the daily market price offered by Mr Market or leave it alone, as dictated by his own judgment and inclination.

Good managements produce a good average market price, and bad managements produce bad market prices reflecting the quote attributed ↗ to Ben “In the short run, the market is a voting machine but in the long run it is a weighing machine.”

By applying the lessons learnt from the book, i have gained multiple times the money and time spent on it.

A prerequisite for Investing

Whenever anyone genuinely want to learn about stock market Investing, i have always recommended this book to them. I do warn that the book is not an easy read. So i always suggest them to read and understand the following concepts which can be found within the Introduction, Chapters 1, 8 and 20.

I also emphasize on the prophetic warning from Graham that the investor must be resigned to see a price decline of 50% or more from their high point. If they cannot sleep peacefully on seeing such a paper loss, then individual stocks are not suitable for them. For such people and to those uninterested in learning or analyzing companies, i recommend buying either an Equity Mutual Fund or Index Fund.

Reading this book, or at least the above chapters, is a prerequisite for my children before they can make their first investment in stocks.

Comparison with other books

Paying for Growth

When i managed to read Common Stocks and Uncommon Profits later, i felt that the ideas of Graham are more grounded. Even though growth brings huge rewards, it is highly unpredictable.

I have found that the combination of a contrarian investing approach with sufficient margin of safety beats the unpredictable nature of growth any day.

Speculation and leverage

Books like Rich Dad Poor Dad talk glowingly about leverage and Speculation. If one reads about the long market history as presented by Graham, one can immediately see, how wrong these ideas are. Gambling attitude combined with fear, greed and social proof produce Lollapalooza effect .

© Prabu Anand K 2020-2026