Benjamin Graham

Benjamin GrahamGraham came to New York from England with his parents in 1895 and grew up in Manhattan and Brooklyn. He was the youngest of three boys. His father died when he was nine leaving the family economically challenged.

Graham graduated from Columbia University in 1914 and then went to work as a messenger for the Wall Street firm Newburger, Henderson and Loeb. He then progressed to writing analysis. He became a partner of the firm in 1920.

In 1926 he formed an investment pool – the Benjamin Graham Joint Account – which grew to $2.5 million withing three years. He managed the pool in return for a share of the profits. However, the Joint Account was hit by the stock market crash of 1929. It lost 70% of it’s value between 1929-1932. However, between 1929 and 1956, Graham managed to achieve a yearly gain of about 17%. From 1928-1956, Graham taught a popular course at Columbia Business School.

Graham looked for a method that was entirely quantitative – and outlined his methodology in his book Security Analysis, published in 1943. Graham’s classic work The Intelligent Investor – referred to by Warren Buffett as “the best on investing book ever written” – explains the fundamentals of a value investing strategy.

Graham is seen as the father of Value Investing. He aimed to buy undervalued companies with strong fundamentals. He refers to a ‘margin of safety’ – the difference between a company’s market price and it’s intrinsic value.

Late in life, Graham moved from New York to La Jolla, California, and finally to the south of France.

Warren Buffett was a student of Graham and described him as the second most influential person in his life after his own father.

Benjamin Graham Quotes

“Wall Street people learn nothing and forget everything.”

“Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble… to give way to hope, fear and greed.”

“The individual investor should act consistently as an investor and not as a speculator. This means.. that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money’s worth for his purchase.”

“I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities.”

“Investing is most intelligent when it is most businesslike.”

“Even the intelligent investor is likely to need considerable willpower to keep from following the crowd.”