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The Intelligent Investor

>> Saturday, December 14, 2013

The Intelligent Investor by Benjamin Graham, first published in 1949, is a widely acclaimed book on value investing. Famous investor Warren Buffett described it as "by far the best book on investing ever written".

I read the book many years ago when I was just starting to invest. As I did not have any financial education background then, I did not really fully appreciate the essence of the book.

Recently, I felt like picking it up again and I felt that I have a significantly better understanding compared to previously. If anyone were to ask me if I would recommend the book, my response will be that it is a must read, however, a good grasp of financial instruments and some background history of financial markets is essential before jumping into it. No doubt that the book is primarily U.S. market centered, hence, it is also important to already have an idea of it first, so as to relate it back to local context if necessary.

As its coming to the end of 2013, it is back to a time of reflections and making new resolutions. This book has inspired me to give what it has taught a shot, seeing the uncertainty of the effects from the U.S. tapering of Quantitative Easing (QE) and the general economic outlook. It is important to strengthen my mindset and investing psychology to handle the volatility ahead.

Key takeaways of the book:
-    Be an investor, not a speculator – No one can accurately predict what is going to happen next, it would be safer to ignore market outlook prediction reports
-    Be a defensive investor if there is no time to commit to investing to become an enterprising investor that does analysis
-    Trading frequently will only benefit the brokerage houses and significantly reducing the returns while increasing the risk of losses
-    Market Price is only an independent number determined by buyers and sellers, it should be measured relatively with actual physical earnings, book value, etc
-    Most mutual funds / unit trusts do not beat the market consistently over the long term, hence it should be better off investing in low expense ETFs
-    To maintain a portfolio of bonds and equities in about 50 – 50 proportions with a range no less than 25 and no more than 75 for either

Wishing everyone a Merry Christmas and a Healthy, Wealthy, Blessed New Year!

2 comments:

Gerald December 30, 2013 at 5:35 PM  

Hi there,

Nowadays, I think it is not enough to be just "an investor". The key thing is to adopt safety margin and practise value investing instead of just buy and hold blindly.

Just my thoughts. Do check out my blog, SG Wealth Builder.

Thank you.

Regards,
Gerald
www.sgwealthbuilder.com

Lau December 30, 2013 at 9:41 PM  

Hi Gerald

By so doing, one has to commit the time and effort to put into practice the analytical work.

So, instead of not investing at all, how would you recommend value investing with safety margin for those, like myself, who lack the wisdom and time commitment?

Great site, perhaps you could share your response thoughts through a post on your site.

Thanks for visiting. Hope to learn more from you. :)

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