The Intelligent Investor

The Intelligent Investor by Benjamin Graham can be summarised in one sentence: Buy a portfolio of stocks, hold on to them. Ok, this of course is too much of an exaggeration but that is one of the lessons I took away from the book.

Archive note: These notes were published in 2019. Claims and figures concerning Graham’s investing arguments and my reading of them at the time reflect the book and the review period; they have not been updated here.

The book is rather long and the audiobook I had came with commentary on each chapter. Many specifics are about the 1960’s and thus are also less relevant. But that doesn’t mean the lessons are any less so.

An investor is in it for the long-term, a speculator wants to make money now. A speculator will almost always lose (and always lose in the long run). You can’t beat the market.

One great example of this is a fund that has found a way (or a group that has a new formula). Once more money joins the fund, they can’t make the same ‘niche’ bets anymore and regress to the mean. Or the formula that you found (which might just be a coincidence/correlation) will start to be used by others (and again you’re back to the average).

In my 2019 notes, I also warned about active investing’s transaction costs. I estimated that buying and holding would cost less than 1% when investing the money and less than 0.25% per year for management. Those figures reflect the review period.

I can highly recommend the book, especially in conjunction with A Random Walk Down Wall Street.

A final lesson I found interesting was the long period for which retirement savings might still be needed: retiring at, say, 68 could leave another 20 years to fund. In these notes I therefore considered keeping a portion, such as 25%, in stocks rather than bonds. That was my reading of Graham at the time.