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Who was Benjamin Graham, and why is he worth listening to?

Graham was not just one of the best investors of all time; he remains far and away the greatest thinker about investing who ever lived. As a money manager and a finance rofessor at !olumbia Business "chool, Graham was a teacher, mentor and hero to such investing giants as "ir #ohn $em leton, William %uane of the "e&uoia 'und, and !harles (unger and Warren Buffett of Berkshire )athaway. Buffett has said* +Ben had more influence on me than any erson e,ce t my father-. Graham was the smartest man . ever knew./ Graham0s te,t Security Analysis, first ublished in 1234, was the first book to a ly rigorous logic and objective standards to the study of stock and bond values. And The Intelligent Investor 55 first ublished in 1242, revised four times during Graham0s lifetime and again, by #ason 6weig, in 7883 55 was the first book that ever e, lained, for retail investors, the intellectual framework and emotional disci line that are essential for financial success. What accounts for Graham0s influence and innovation? 9ut sim ly, by any measure he was one of the most brilliant men of the 78th century. Graham0s genius manifested itself on at least five fronts* as an intellectual as a financier as a sychologist as an historian as a writer As an intellectual, Graham graduated second in his class at !olumbia and, before the end of his senior year, was offered faculty ositions in three different de artments* :nglish, Greek and ;atin, and mathematics. <)e was all of 78 years old.= ;ater, Graham came u with several of the key ideas behind the Bretton Woods agreement that moderni>ed the global financial system. )e also atented an im roved slide rule, wrote a Broadway lay and taught himself " anish so he could translate a major ?ruguayan novel, (ario Benedetti0s The Truce, into :nglish. <By the end of his life, Graham knew at least seven languages.= But Graham was not just smart* he

was wise. )is book5learning and &uantitative genius were always tem ered by rudence and common sense. As a financier, Graham amassed one of the best track records in the history of investing, out erforming the "tandard @ 9oor0s A885stock inde, by at least 7.A ercentage oints annually for a eriod of more than 78 years. Graham survived the Great !rash of 1272 and, for the rest of his career, issued timely warnings about overvalued markets <including the severe colla se in 12B3512B4=. )e also hel ed restructure G:.!C !or . and was a fearless advocate for better cor orate governance, going so far as to take on the %ockefeller family by shaking u their sheltered interest in the Dorthern 9i e ;ine !o. As a sychologist, Graham cast a bright s otlight on human behavior, revealing subtleties and contradictions that antici ated the findings of Dobel ;aureate Eaniel Fahneman. $hroughout his writings, Graham is not concerned with how eo le ought to act; instead, he focuses on how they actually behave in the real world. All his recommendations are based not just on what eo le should do, but on what they can do. Graham knew that self5control and self5knowledge are the keys to successful investing. .n his words, +$he investor0s chief roblem 55 and even his worst enemy 55 is likely to be himself./ .f you read nothing but !ha ters 1, G, and 78 of The Intelligent Investor, you can get off the self5destructive ath that sends so many eo le astray in their financial lives. As a historian, Graham had a mastery of the facts about everything and everyone that had come before him. $he ra>or of his logic, shar ened by re eated readings of Aristotle and 9lato, made mincemeat out of contem oraries who argued that +valuations don0t matter/ or that +you can0t over ay for a great stock./ )istory taught Graham that the financial markets obey fundamental laws as irrevocable as Dewton0s laws of thermodynamics. $hroughout his books, Graham shows that regression to the mean 55 what goes u must come down, and what goes way u must come down even harder 55 is the first law of financial hysics. Graham0s commanding knowledge of history made him a formidable ro het, since the best way to redict the financial future is sim ly to understand the ast. $o avoid disastrous losses in the 788857887 bear market, you needed only to have read and understood Graham0s warnings about ast bubbles. And there0s no

better way to brace yourself against the booms and busts of the future than by learning what Graham has to say. As a writer, Graham was a master of formal but clear and classic rose. ;arge arts of The Intelligent Investor are set u as com are5and5 contrast e,ercises. $he distinctions that Graham draws between stocks and com anies, rice and value, investment and s eculation, + rojection/ and + rotection,/ show how to think about the big icture. And his airing of stocks 55 one glamorous and over riced, the other stodgy and chea 55 show how to analy>e individual investments. 'inally, Graham0s imaginative brilliance shines forth in his meta hor of +(r. (arket,/ the manic5 de ressive neighbor who remains the single best image ever devised for e, laining how the stock market really works. Although Graham was born in 1G24 and died in 12BH, the roofs continue to ile u with the assage of the years* Graham was not just the greatest investing mind of his time, but he remains the greatest investing mind of all time. :very investor, no matter how much or little you know, can benefit from Graham0s ideas and from what Warren Buffett calls +the best book about investing ever written./