The Intelligent Investor, by Benjamin Graham, has been called “by far the best book about investing ever written” by investment superstar Warren Buffett.
Even so, you will be excused if you log onto Amazon, or visit your local bookstore, and choose to make another reading selection.
Graham’s book was first published in 1949 and contains references to companies and situations that may be unfamiliar to the 21st century reader.
But the third addition of the text, released last week, on its 75th anniversary, might be attractive to financially adventurous readers, in part as an interesting artifact, but also for contemporary commentary provided by the Wall Street Journal columnist Jason Zweig.
Graham was born in London in 1894 and entered Columbia University at age 16. Before the end of his senior year, Graham was offered faculty positions at Columbia in three different departments: English, Philosophy, and Mathematics.
Graham went on to start a successful investment company, in addition to holding university faculty positions.
His most famous student, while teaching at Columbia Business School, was none other than Warren Buffett. In addition, Graham was one of the original supporters of an investment certification program that eventually became the Chartered Financial Analyst (CFA) designation – of which I am a proud holder.
HarperCollins Publishers turned to Jason Zweig in June 2003 to revise Graham’s initial text. The second edition was published in 2005, and Zweig took on the new assignment of writing annotations for each chapter in the 3rd edition.
Among many important concepts, Graham introduced the idea of margin of safety: the belief that an investor should not focus exclusively on how much money can be made but on how much money can be lost, because even the best investors are likely to be wrong roughly 45 percent of the time.
For individual investors, the value in Graham’s “definitive book on value investing” may be more about what not to do, than what to do, with your money.
-RK