A publication that Warren Buffett refers to as “the best book about investing ever written” definitely deserves a spot on your bookshelf.
The Intelligent Investor, commonly referred to as the bible of value investing, was published by none other than the father of value investing, Benjamin Graham. Graham was a brilliant man who certainly knew his way around a balance sheet. He mentored some of the greatest investors to date, among others Warren Buffett, Irving Kahn and Walter Schloss.
Fortunately for us, he captured the essence of his investment knowledge in text, allowing investors worldwide to learn from his wisdom. The value investing methods he discusses in The Intelligent Investor are still relevant to this day, even after more than fifty years since its original publication in 1949.
Since The Intelligent Investor is the most important book you will ever read on how to reach your financial goals, we decided to cite our favourite insights from the book. The following twenty quotes capture the gist of the characteristics of an intelligent investor.
You don’t have to be a genius to invest successfully.
1. “To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.” (pg. ix)
You do not have to be smarter than the rest. You have to be more disciplined than the rest.
2. “By developing your discipline and courage, you can refuse to let other people’s mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.” (pg. xiii)
3. "Investing isn’t about beating others at their game. It's about controlling yourself at your own game.” (pg. 219)
4. “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioural discipline that are likely to get you where you want to go.” (pg. 220)
A good businessman makes a good investor.
5. “The sillier the market’s behavior, the greater the opportunity for the businesslike investor.” (pg. ix)
6. “Investment is most intelligent when it is most businesslike.” (pg. 523)
An intelligent investor doesn’t react to the ‘flavour of the month’.
7. “The defensive (or passive) investor will place chief emphasis on the avoidance of serious mistakes or losses. His second aim will be freedom from effort, annoyance, and the need for making frequent decisions.” (pg. 6)
8. “In the short run the market is a voting machine, but in the long run it is a weighing machine.” (pg. 477)
A successful investor takes a contrarian approach to investing.
9. “The intelligent investor is a realist who sells to optimists and buys from pessimists.” (pg. xiii)
10. “The intelligent investor gets interested in big growth stocks not when they are at their most popular – but when something goes wrong.” (pg. 183)
Activity is expensive.
11. “Thousands of people have tried, and the evidence is clear: The more you trade, the less you keep.” (pg. 149)
12. “If fees consume more than 1% of your assets annually, you should probably shop for another adviser.” (pg. 277)
Think long term.
13. “Never buy a stock because it has gone up or sell one because it has gone down.” (pg. 206)
Price is not equal to value. Price is what you pay, value is what you get.
14. “An investor calculates what a stock is worth, based on the value of its businesses.” (pg. 36)
15. “A great company is not a great investment if you pay too much for the stock.” (pg. 181)
The best investment decisions are based on facts, not speculation.
16. “People who invest make money for themselves; people who speculate make money for their brokers. And that, in turn, is why Wall Street perennially downplays the durable virtues of investing and hypes the gaudy appeal of speculation.” (pg. 36)
Intelligent investors capitalise on market fluctuations.
17. “Price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal.” (pg. 205)
18. “The intelligent investor should recognise that market panics can create great prices for good companies and good prices for great companies.” (pg. 483)
19. “A defensive investor can always prosper by looking patiently and calmly through the wreckage of a bear market.” (pg. 371)
An intelligent investor knows how to manage risk.
20. “Successful investing is about managing risk, not avoiding it.” (pg. 535)
3D Value Investing is a refinement of Benjamin Graham's approach to investing. Learn all about it in the Practical Guide to Value Investing eBook below.