The Intelligent Investor

This was my first dive into value investing, and it took almost a whole month for me to get through as the book is extremely dense and requires extra work to understand some outdated (Graham’s last revision was in the early 1970s) content on methodology. The book highlights timeless principles and offers plenty of applications. I took caution in analyzing the exact methodology and focused more on the core principles, among which are the fundamental difference between investing and speculating, being humble about market volatilities, tempering expectations, and leaving a margin of safety to cushion for unaccounted risk. I learned so much through going through and searching up all the terms I didn’t understand, though I recommend that you read this with a moderate background knowledge and take note of caution on the dated material. Zweig’s commentary was great in that it’s less dense and more recent, though it seems to focus too much on bashing the mass stupidity of the dot com bubble which got repetitive quickly.

There are too many important points in the book, but the most understandable and applicable is the idea of the margin of safety. On stocks, the idea is if you’re trying to buy a stock at a good price below its intrinsic market value, the difference between the price and value is your margin of safety. The bigger the margin, the more unexpected bad things can happen and you will still break even, ensuring safety of the principal. The idea is humbly rooted in the admittance that no one can be certain he’s not completely wrong, and simply having a margin protects you from all kinds of risk without the need to predict and account for each of those individual risks. You can apply it to real life: if you need to be somewhere at 7:30, you might try to arrive at 7:20 to leave the margin of safety of 10 minutes in case something goes wrong. And, if the 7:30 appointment is very important, you might leave a margin of an hour or two; similarly, if you’re investing large sums, you should leave a correspondingly large margin of safety to ensure that your principal isn’t in danger.