# Benjamin Graham



## tradernor (8 June 2014)

If you are a beginner, Graham's book is fine for you.


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## luutzu (8 June 2014)

*Re: Ben Graham*



tradernor said:


> If you are a beginner, Graham's book is fine for you.




I wouldn't stop at Graham, but I wouldn't go very far from what he taught at all.

Most of the other investment books i've read simply give what he said context, different examples and angle to what he had already taught.


I think people all see him as a "value" guy, the father of value investing and all that... and yes he does look for real assets in his investments, and he even diversify and not invest that much into any one stock... just to be safe i guess. But that does not mean he's not aware of growth stocks or that future earnings is where profits really is etc... heck, he even discusses technical analysis (and found it to be... impractical).

So while the Intelligent Investor could be considered "introductory", there's nothing "for beginners" - in the way of the common 120 page arts/basics of investing or investing for dummies - about it.

----

To say that Graham's is for beginners is like saying Sun Tzu's The Art of War; Machiavelli's The Price, Lao Tzu's Tao te Ching, Confucius' Analects... as books for beginners.

These books provide you with a framework, a philosophy, from which you apply and adapt to opportunities as you see them.

Sun Tzu doesn't tell you what trajectory to fire your cruise missiles, what type to use for the most damage... but he does tells you that before you throw a spear or a rock or a laser from the death-star, you'd probably want to look at this and that. Same with Graham - he won't tell you what calculator or program to use, won't find what stocks to buy from him, not now... but he will have taught you that before you buy Facebook, you'd probably want to value it first... and to value it, you ought to look at this and that... and if this and that does not now exists, you'd probably best to avoid it...  but if you are sure it will exists (i.e. profit) and exists at this quantity then of course you are free to go ahead and invest (speculate).

I mean, Buffett has always said he won't invest in technology stocks; he didn't get into Intel when Noyce and Moore where acquaintances with him and was seeking capital... and recently bought IBM.

I don't think the IBM decision was made from generalisation of Graham's ideas or his value formula or such.


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## switesh (26 June 2014)

Accounting is the language of Business (or Investing). 

When my curiosity grew for Investing I began with basic Accounting, and that is where I would recommend any aspiring beginner to start. Here's the book I started with:
Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports

A beginner might find reading The Intelligent Investor useful before attempting Security Analysis.
Security Analysis is more likely to be a tough read for a beginner. It's filled with examples & excerpts of financial statements of companies around the Depression period. Hence understanding Accounting is essential before attempting to read Security Analysis.
I've read it twice so far, and I re-read my notes on an annual basis. I also listen to the audio-book version when I'm travelling. It's truly 'the bible' of investing for me.

The following are Books I've read and would highly recommend (my investment hamper):

Buffett FAQ - A compendium of Q&As with Warren Buffett
The Essays of Warren Buffett: Lessons for Corporate America - Warren Buffett
Security Analysis: Sixth Edition, Foreword by Warren Buffett 
Berkshire Hathaway Letters to Shareholders, 2013
Buffett: The Making of an American Capitalist
The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market
The Little Book of Sideways Markets: How to Make Money in Markets that Go Nowhere - Vitaliy N. Katsenelson

Other Books I've read on the subject of Investing: 

What has worked in Investing - Tweedy, Browne Company LLC
The Manual of Ideas: The Proven Framework for Finding the Best Value Investments
The Little Book of Valuation: How to Value a Company, Pick a Stock and Profit
Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports
Quality of Earnings

Of-course, Knowledge would be incomplete without an appropriate portion of Wisdom. 


> “Wisdom is not a product of schooling but of the lifelong attempt to acquire it.”
> ― Albert Einstein




Books I've read on Wisdom, Psychology, & Behavioral Economics:

Seeking Wisdom: From Darwin to Munger
Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger
Influence: The Psychology of Persuasion
Thinking, Fast and Slow
What Investors Really Want: Know What Drives Investor Behavior and Make Smarter Financial Decisions

And there are more books in the pipeline as part of my continual reading. I always take notes, and highlight text as I read. Once I'm done reading a book I type in my notes in Microsoft OneNote. Taking notes and re-reading them is an invaluable exercise to me. The learning never stops...



> “Learn as though you would never be able to master it; hold it as though you would be in fear of losing it.”
> ― Confucius


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## craft (26 June 2014)

switesh said:


> Accounting is the language of Business (or Investing).
> 
> When my curiosity grew for Investing I began with basic Accounting, and that is where I would recommend any aspiring beginner to start. Here's the book I started with:
> Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports
> ...





Hello switesh.

It’s somewhat unusual to find somebody else on the road less travelled, so I just wanted to say G’day and acknowledge the quality and content of your post.

Some other possibilities off the top of my head that may be worthy of adding to your future reading list.

Bruce Greenwald – in relation to competitive advantage
Howard Marks – in relation to risk.
Seth Klarman – Risk-averse strategies
Michael Mauboussin - Psychology, & Behavioral
Jeremy Grantham, Ben Inker and James Montier are all at GMO and their strategy articles are always thought provoking. Montier books on value investing and behavioural investing are also good resources.



switesh said:


> I always take notes, and highlight text as I read....Once I'm done reading a book I type in my notes in Microsoft OneNote. Taking notes and re-reading them is an invaluable exercise to me. The learning never stops...




There is another person on the forum called Ves - who I know has been doing some thinking about storage and recall of knowledge via a personal recording process - If you two ever struck up a conversation on the topic I for one would be a very interested reader.

Thanks again for your posts.


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## Value Collector (26 June 2014)

Warren Buffet says he is 85% graham and 15% Phil fisher.

That 15% Phil fisher is important too, I would recommend reading his work as well, "Common stocks and uncommon profits is a good one"


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## luutzu (26 June 2014)

switesh said:


> Accounting is the language of Business (or Investing).
> 
> When my curiosity grew for Investing I began with basic Accounting, and that is where I would recommend any aspiring beginner to start. Here's the book I started with:
> Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports
> ...




Woah! Let's be friend 
I agree with Craft, it'd be good to bounce ideas off each other.

My poor wife could do with not having all conversations being diverted towards investing - she was saying how our kids and all her friends kids could just sing all the songs from Frozen and it's... "did you know that Buffett said there's no way you would spend hours scanning kids movies before you sat them down to get away for a couple of hours, that you'd just pick any Disney ones? That's brand power, that's blah blah....


----
I got a lot of reading to catch up on. 

I second ValueCollector, Fisher's Common Stocks and Uncommon Profit is highly recommended.

I've also found that reading business/company biographies greatly enhance my understanding when analysing companies. Books like 'Behind the Arches', 'Be my Guest' by Hilton of Hilton Hotels, 'Made in America' by Sam Walton, 'Barbarians at the Gates'...

From behind the arches, I can tell right away how this potential franchiser won't go very far: that he charges his franchisees a fee, get a cut of their profits and on top, make profits by selling them inventories and stocks at greatly marked up prices. That's not how Ray Kroc built McDonald's.

Listening to "Built to Last" by Collins and Porras. A very thorough, scientific, analysis of what makes "visionary" companies. A very good book so far.


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## Value Collector (26 June 2014)

luutzu said:


> "did you know that Buffett said there's no way you would spend hours scanning kids movies before you sat them down to get away for a couple of hours, that you'd just pick any Disney ones? That's brand power, that's blah blah....




lol, I watched that speech when I was researching Disney, I ended up buying the stock and hence have Disneyland in my avatar.


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## luutzu (26 June 2014)

Value Collector said:


> lol, I watched that speech when I was researching Disney, I ended up buying the stock and hence have Disneyland in my avatar.




Disney must've been doing well for you. Owning Marvel, Pixar, and Frozen... soon Frozen on Ice, Frozen Again haha.
I'm always amazed at the many ways Disney managed to make money out of any one of their movies.


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## switesh (26 June 2014)

Thank you all for your comments.

Phil Fischer's book - the "scuttlebutt" approach! Yes, I've read it, just forgot to list it. Certainly a high recommendation for this book.

Yes, material from Howard Mark, Bruce Greenwald, Seth Klarman, & Michael Mauboussin are in my pipeline. I'll be keen to read stories from Mr's B. (Nebraska Furniture Mart), and Sam Walton too.

Craft - your location "_road less travelled_", coincidentally is similar to the title of my favorite poem from Robert Frost - "_The Road Not Taken_"  

If I may deviate a bit, luutzu makes a good point about franchisee - 'Skimming off the top'. Essentially leaves the investor with very little value (or margin of safety), because hardly anything trickles down to bottom-line (especially if upfront capital commitment is lumpy).

My approach to valuing small business or franchisees is similar to the one I use for stocks. It's rough cut, loose numbers, and all in the head (perhaps a bit simplistic and somewhat of an educated 'guess'). I've tried this approach with small retail like local pizza shops, cafes, convenience stores etc and it's roughly in the right direction.

I will make a separate post on it a bit later and open the floor for criticism / suggestions.


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## Huskar (26 June 2014)

switesh said:


> The following are Books I've read and would highly recommend (my investment hamper) . . .




Love your stuff switesh, I am insatiable reader also.

Yet Milton haunts me: 

                                            "Who reads
Incessantly, and to his reading brings not
A spirit and judgment equal or superior,
(And what he brings what needs he elsewhere seek)
Uncertain and unsettled still remains,
Deep-versed in books and shallow in himself,
Crude or intoxicate, collecting toys
And trifles for choice matters, worth a sponge,
As children gathering pebbles on the shore."

(the irony is not lost on me btw)

Happy investing


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## craft (27 June 2014)

Huskar said:


> (the irony is not lost on me btw)




Speaking of irony – there’s a very powerful irony acknowledged by Ben Graham in an appendix of one of the later editions of Intelligent Investor where he is talking about his long term holding in GEICO.




> Postscript to The Intelligent Investor
> 
> 
> By Benjamin Graham
> ...


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## luutzu (27 June 2014)

Mozart,
Thanks for that BuffettFAQ.com. 

There's also a collection of 'Warren Buffett Interviews and Letters - Kamlesh Singhvee' on a torrent site.
Contain his partnership letters, Berkshire's to 2008 and a few interview transcripts.

for anyone interested, instructions here: 
	

		
			
		

		
	

View attachment torrents.pdf


------

Craft,
That's a good example. 
I didn't quite appreciate what he was saying when i read it before.


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## Huskar (27 June 2014)

craft said:


> Speaking of irony – there’s a very powerful irony acknowledged by Ben Graham in an appendix of one of the later editions of Intelligent Investor where he is talking about his long term holding in GEICO.




Thanks Craft - I remember it well it struck me also. Graham has an eloquence which is a pleasure to read, no?

Uncle Warren also had his fair share of luck along the way of course, which in hindsight appears more pure genius. But what is luck except when opportunity meets a prepared mind? Its having the mindsight that is the difficulty and recognising the opportunity for an opportunity, otherwise (as the inspiration for Graham's most famous dictum states) "This too shall pass".

It is good to question your heroes


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## luutzu (30 June 2014)

Danny DeVito's Value Investing


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## switesh (23 September 2014)

Currently reading 'Warren Buffett Partnership Letters'.

The letter from 1964 is particularly interesting.
It explains why the DOW is no pushover as an index of investment achievement. _*<- Very important to understand*_

It outlines his three main approaches:

*Generals, or Under-values stocks*: A category of undervalued stocks determined primarily by quantitative standards, but with considerable attention also paid to the qualitative factor.
*Workouts*: These are securities with a timetable, arising from corporate activity - sell-out's, mergers, reorganizations, spin-off's etc.
*Controls*: They result from a situation where a cheap security does nothing price-wise for an extended period of time  until we are able to buy a significant percentage of a company's stock. At which point we can probably assume some degree of, or perhaps complete control of the company's activities. Once control is achieved, the value of the investment is determined by the value of the enterprise (Management play's a VERY significant role here), not the irrationalities of the market.

The appendix of the same letter covers a great illustration of the Texas National Petroleum 'work-out', and also of Dempster Mill Mfg.


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## switesh (8 February 2015)

Have recently finished reading Letters from a Self-Made Merchant to His Son. Packed with timeless business wisdom.
	

		
			
		

		
	



Surprised it's not mentioned in business/investing circles that much.

Also, may I ask if anyone's ready Henry Singleton's annual reports / letters to shareholders (during his active years at Teledyne)? If so could you please point me to them. Much appreciated.


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## luutzu (9 February 2015)

switesh said:


> Have recently finished reading Letters from a Self-Made Merchant to His Son. Packed with timeless business wisdom.
> 
> 
> 
> ...




A google search points to this book:

There is a book about Teledyne / Henry Singleton called *Distant Force*, written by George Roberts (president / CEO after Singleton).

The book contains a CD which has PDFs of all annual reports.


I just bought it on Amazon... if it contains the Annual Reports will send you a copy... for price, haha jk.

Should be here in March.


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## KnowThePast (9 February 2015)

switesh said:


> Have recently finished reading Letters from a Self-Made Merchant to His Son. Packed with timeless business wisdom.
> 
> 
> 
> ...




Thanks Switesh.

Looks interesting, just ordered it on amazon myself.


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## switesh (10 February 2015)

Yeah I was aware of 'Distant Force'. I have it in my reading pipeline (which is packed until end of march so won't be reading this book until then). But didn't know it contained the letters as well, so thanks for pointing that out luutzu.

Also, thought I might mention Austin Donnelly here. A well respected, but less talked about investor. I've lined up a few of his books for some night reading for the next 3 weeks. Good to learn about a local investing legend (he was known in America too) and his work.


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## ROE (10 February 2015)

KnowThePast said:


> Thanks Switesh.
> 
> Looks interesting, just ordered it on amazon myself.




out of copyright you can get them for free here

http://www.gutenberg.org/ebooks/21959


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## switesh (17 April 2015)

On my recent reading spree have been two investors who practise deep value investing:
Francis Chou - Letters of the Manager - Chou
Jeroen Bos - Deep Value Investing: Finding bargain shares with big potential

I've also watched all of Francis Chou's videos from http://www.bengrahaminvesting.ca/Resources/videos.htm
I've always found myself naturally attracted to people with humility & humbleness - especially when they're successful and yet keep a low profile. I'm in absolute awe & respect for him. These are the type of people I dig to learn from. Reading his letters to shareholders was a great delight - knowledge, humbleness, & integrity - I love that smell.

Jeroen Bos is someone I recently discovered after digging for more Value Investing practitioners. I've read his book and I like the case studies - but you have to read the 'appendix' recommended in his book to understand the thought process behind the investment decisions he outlines in the case studies in the book.

Oh yes, and of course, a post on Benjamin Graham would be incomplete without mentioning Walter Schloss. I've studied him briefly in the past but am looking forward to dig out case studies and reading them next month.


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## Miner (17 April 2015)

I noticed today there are two threads related to Benjamin Graham.
May be our System Administrator to consider to merge them ?
Thanks


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## galumay (17 April 2015)

switesh said:


> On my recent reading spree have been two investors who practise deep value investing:




Thanks switesh, I will add them to my list!


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