Benjamin Graham was Warren Buffett’s mentor; wrote the book ‘The Intelligent Investor’; and is hailed as one of the investment world’s most influential people. But, what are the devilish details that made this man tick?
10 Benjamin Graham Facts
For starters, Graham spent his time translating old texts into various languages. He once translated Homer into Latin for fun! Here are some lesser know facts about the man that many called simply “Ben.”
- He’s often called the “Great American Investor,” but Graham was born in London, England.
- Graham’s real name was Benjamin Grossbaum. His family changed their last name for fear of anti-German sentiment following WWI. The name ‘Graham’ stuck, and that’s even the name listed on Graham’s obituary!
- Graham’s first job was that of a chalker with the firm Newburger, Hendersen, and Loeb. He was swiftly promoted to the financial research division of the company as soon as his talents were recognized. A good move!
- At 25-years old, Graham was earning more than $500,000 a year!
- The 1929 crash caused Graham to lose some of his money, and his wife had to go back to work as a dance teacher – even Benjamin Graham had lessons to learn!
- After partnering with Jerome Newman in 1926, the Graham-Newman Corporation was formed. He spent evenings teaching at Columbia University. It is said that Graham was a kind and patient teacher!
- Graham is credited with being the ‘Father of Security Analysis and Value Investing.’
- Warren Buffett was a student in one of Graham’s classes at Columbia University. When Buffett asked for a job with Graham’s firm, he was turned down! A persistent Buffett kept on asking – proof that persistence pays off! Eventually Graham accepted Buffett’s resume, and the two became lifelong friends.
- Warren Buffett’s first son is named Howard Graham Buffet as homage to his teacher and mentor. Buffet credits Graham with his investment beginnings.
- Graham died at age 82 in Aix-en-Provence, France.
10 Benjamin Graham Quotes
Here are 10 super intelligent quotes from the Father of Value Investing himself, Benjamin Graham:
“If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.” – When you buy groceries, you buy the stuff you need. Food will always be a necessity. When you’re shopping for perfume rather, you’re shopping for the latest trends. They go in and out of fashion after a few years, if not months. Stocks in companies that are here to stay, rather than the latest hot trend, should be your primary strategy.
“Obvious prospects for physical growth in a business do not translate into obvious profits for investors.” – Just because a company’s growth is very visible, e.g., increasing number of branches or brand new buildings, doesn’t mean it will give you the best returns. The best way to choose which stocks to buy is still by looking at the financial statements as well as its industry and economy. Remember, there’s always more than meets the eye!
“Individuals who cannot master their emotions are ill-suited to profit from the investment process.” – Value investing is long-term investing. This means there may be times when the values of your holdings go down. But you’re not in it for the short-term swings; you only care about the long-term outlook. The stock price of a fundamentally sound company will appreciate significantly in the long term. So in in order to wait out those times of short-term fluctuation, you need to practice strength and self-discipline, e.g., don’t panic and just hold on to your portfolio. Keep calm and enjoy long-term profits.
“Operations for profit should be based not on optimism but on arithmetic.” – Any investment based on emotion, be it pessimism or optimism, is a high-risk proposition because emotions are subjective. To invest successfully, you need to base your decisions on something that’s objective – numbers. It’s been said that numbers don’t lie and hence, invest based on facts and figures, not on feelings.
“Do not let anyone else run your business, unless (1) you can supervise his performance with adequate care and comprehension or (2) you have unusually strong reasons for placing implicit confidence in his integrity and ability. For the investor this rule should determine the conditions under which he will permit someone else to decide what is done with his money.” – If you decide to delegate the management of part or all your investments to another person, you can’t just do so blindly. You have to know both the capacity and the character of that person. A person with the most beautiful heart but with the shallowest of minds will eventually run your investment into the ground. A person who may be highly qualified but whose character is suspect makes matters even riskier. You need to know how to delegate to right the people. Otherwise, better do it yourself.
“Those who do not remember the past are condemned to repeat it.” – History – especially the bad side of it – will repeat itself unless you learn from its lessons. It has been said that failures aren’t really failures but an opportunity to learn what doesn’t work so you can try something else. Learn from your mistakes and do things differently the next time. If you always do what you always did, you’ll always get what you always got.
“The intelligent investor is a realist who sells to optimists and buys from pessimists.” – This is what the contrarian investment strategy is all about, which is profiting by going against the herd. The best time to sell your stocks or investments is when everyone else – the majority at least – are so high on investing that they’re not wary of buying at already irrational price levels! And the best time to buy is when everyone’s so scared that they’re willing to sell their stocks or other investments at dirt-cheap prices.
“The stock investor is neither right or wrong because others agreed or disagreed with him; he is right because his facts and analysis are right.” – Investing with the crowd or based on current euphoria is as wise as bungee jumping with fishing line. This is similar to investing using your emotions and not actual numbers. If you don’t believe me then consider this: if most people in your social circle started eating rocks for dinner, would you follow suit? I didn’t think so. Why should investing be any different?
“People who invest make money for themselves; people who speculate make money for their brokers.” – Investing is very different from speculating, the former involves taking calculated risks while the latter just takes risks, however irrational. When you invest properly, you’re holding your investments for the long haul, you profit from your investments’ long-term price appreciation but your broker starves because you execute very few transactions. On the other hand, speculating is a highly risky proposition that increases your chances of losing money requires that you make a ton of transactions, incurring many broker fees along the way. And guess who’s going to laugh their way to the bank? Here’s a clue: it’s not you.
“All things excellent are as difficult as they are rare.” – Excellence means being head and shoulders above everyone else. That in and by itself means rarity. Being an excellent investor takes a whole lot of time and effort, which most people shun or despise. In the long run, the results of the time and effort you put into becoming an excellent investor will result in excellence.