Classic Text on Value Investing: The Intelligent Investor

This classic text is annotated to update Benjamin Graham's timeless wisdom for today's market conditions...

The greatest investment advisor of the twentieth century, Benjamin Graham, taught and inspired people worldwide.
Graham's philosophy of "value investing" -- which shields investors from substantial error and teaches them to develop long-term strategies -- has made The Intelligent Investor the stock market bible ever since its original publication in 1949.

Over the years, market developments have proven the wisdom of Graham's strategies. While preserving the integrity of Graham's original text, this revised edition includes updated commentary by noted financial journalist Jason Zweig, whose perspective incorporates the realities of today's market, draws parallels between Graham's examples and today's financial headlines, and gives readers a more thorough understanding of how to apply Graham's principles.

Vital and indispensable, this HarperBusiness Essentials edition of The Intelligent Investor is the most important book you will ever read on how to reach your financial goals.

If you have only time to read one book on investing, this classic should probably be it. But if you recently have read some of the popular get-rich-quick books, "The Intelligent Investor" is a necessary and powerful antidote.

Graham's writing is clear, concise and level-headed. He warns against unreasonable financial expectations and proceeds to explain his theories in sufficient detail to be worthwhile, without being over the comprehension of the layman interested in investing.

The author has an extremely realistic view of the investment world. He sees the real risk where speculators may imagine there are instant riches. For Benjamin Graham, safety of capital comes first. But at the same time, he makes it clear that safety is not guaranteed, even if you do have a properly selected and well balanced portfolio of stocks and bonds. 

On page 25, Mr. Graham warns the reader that: "There is no certainty that a stock component will insure adequately against 'large-inflation' but it should carry more protection than the bond component." The author does recognize that: "The outright ownership of real estate has long been considered as a sound long-term investment, carrying with it a goodly amount of protection against inflation." With this statement, he seems to recognize that inclusion of real estate could make an investment portfolio stronger. But he does not analyze real estate extensively as an investment in his book because he says that it is not his field.

The book is lengthy and "solid", as opposed to other finance books that hope to explain investment in 100-200 pages. Topics include stocks vs. bonds, inflation, security analysis, and margin of safety (Graham's analysis of the assets of a company in relation to its debt). Zweig's commentary is useful, with footnotes to clarify historical references and, occasionally, demonstrate instances where Graham's predictions proved untrue. At the end of each chapter, Zweig uses recent (up to early 2003) examples of Graham's concepts to make things clearer to modern readers.

Graham principles stand the test of time because it is full of wisdom. He carefully define what investment is: "operation is one which, upon thorough analysis promises safety of principal and an adequate return", which clearly distinguish between investors and speculators (to understand a matter deeply, one needs to understand the definition.) Can the Graham principles be proved (like a math equation e=mc^2) ? No. But, accept it like a proposition of investing. (somewhat like the proposition in relativity theory).

All said, this is a book about investment philosophy (not "how to make million" books, not "how to analyze stock" book, not how to pick stock book). The book is full of wisdoms and if one understands and applies these wisdoms, he or she will be better off, not only in investing but other aspects of life as well, because it's the philosophy. Wisdoms are said by wisemen, mostly old, so it's harder to appreciate by younger one unless one has experienced through the same situations.