As the founder of security analysis, Benjamin Graham, wrote in The Intelligent Investor in 1949: “The investor’s chief problem – and even his worst enemy – is likely to be himself. He also transformed the world of investing - in ways most investors today can only dream of. Above all, it means trying to save people from themselves.
Graham lists two types of intelligent investors. My job, as I see it, is to learn from other people’s mistakes and from my own. The intelligent investor is the one who estimates the value of a stock based on some key parameters like the company’s long-term prospects, quality of management, financial strength and capital structure, dividend record, and current dividend. Not many people care to admit that they spend their careers being part of the problem instead of trying to be part of the solution. It’s also no wonder that the media has ignored those findings.
It’s no wonder that, as brilliant research by the psychologist Paul Andreassen showed many years ago, people who receive frequent news updates on their investments earn lower returns than those who get no news. The greatest investment advisor of the twentieth century, Benjamin Graham, taught and inspired people worldwide. It’s a good piece, and includes much of what I try to teach in Retirement Watch. (Subscription might be required.) He summarizes it as saving investors from themselves. In this edition he summarizes what he’s been trying to teach over the years. Jason Zweig’s been writing a column for The Wall Street Journal for a long time.
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