Benjamin Graham’s The Intelligent Investor is one of a handful of books you hear mentioned over
and over again when you ask investors to name the best investing books of all-time. Graham was far ahead of his time in talking about investor behavior and human psychology in terms of the role they play in shaping how markets and investors generally work. Let me explain.
By Ben Carlson (awealthofcommonsense.com)
The edition I read was annotated by Jason Zweig which was very helpful because he was able to provide context around many of the subjects that were included in the original version…written back in the 1950s. I recently came across an old piece that Zweig wrote for the CFA Institute that outlined some of the lessons learned from that experience.
Zweig touches on Graham’s five kinds of brilliance:
saying…The thing that has always impressed me when reading Graham’s work is how far ahead of his time he was in talking about investor behavior and human psychology in terms of the role they play in shaping how markets and investors generally work:
Graham’s insights into human behavior are remarkable. He made quite clear that the central difficulty of investing, both for retail and for professional investors, is that we are all our own worst enemy. We buy high; we sell low. We do the worst possible thing at the worst possible time because we are most certain that we are right just when we are most likely to be wrong. Graham understood that we act this way because of the way we are designed.
Zweig then goes on to talk about how Graham’s insights are relevant for financial professionals in dealing with their clients: Graham also understood an important and subtle point for investment professionals who are assisting individual investors—the importance of focusing not on what people ought to do to get optimal results but, rather, on what they can do. The best investing advice is not theoretically ideal but psychologically practical.
No Comments