The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)
ISBN:9780060555665 read summary

I had been reading this book since the same time I was initiating my investment life in stocks. With it i discovered some mistakes I had been doing then correct the course of my investments. It was enlightening to discover my behavior was playing against me and I should control myself in order to avoid more losses. Thanks to this book now I have proffits.

The classic book on value investing, and for good reason. For someone who wants an overview of the philosophy and principles behind value investing, this is an excellent choice. The information is thorough and the argument is persuasive. My fear is that it is too persuasive: after reading it, people might be tempted to think they can make money using the investment strategy explained by the book. Read it for the tremendous knowledge to be found in it, but don't be fooled - most intelligent investors are better off investing in index funds.

Can a rewriting of a financial classic be worth reading? Absolutely. Graham might have been the greatest value investor of his time, but his prose could be dry. Jason Zweig stays faithful to the original, while offering modern examples of stock market hubris that Graham certainly would have nodded his head to. Although Graham and Zweig share a message, it's easy to distinguish the one's words from the other: besides, the book uses different fonts for each. Zweig's comments on the absurdity of the dot-com bubble are worth the price of the book itself. The message is timeless: look at a company's fundamentals, before you look at the fluctuations of its stock price. Understand that you're buying a piece of a business, not a spin on a roulette wheel. Above all, be disciplined. The vast majority of the book's readers won't do any of that, human nature being what it is, but the quiet truths of Graham's approach will outlast Jim Cramer and his ilk.

The Intelligent Investor is arguably the greatest book ever written on investing. What is unfortunate for this book, however, is that Warren Buffett's ringing endorsement of it makes people think the whole book will teach you to invest like him. This perception is inaccurate. There is a two-pronged theme to "The Intelligent Investor": investment advice for the novice (classified in the book as the "defensive investor") and investment advice for the full-time investor (classified as the "enterprising investor").

The book is hugely valuable for both types, and the advice for the defensive investor is almost a prototype for much of the financial planning advice one receives today. In fact, it is more valuable, since the focus is on lowering volatility and getting income from dividends and interest-- through boom and bust, low inflation and high inflation-- while generally paying much less for advice, since his strategies suggest there should low turnover in your portfolio.

What most people read the book for, however, is for the information on becoming a better-than-average investor. I have heard Buffett say that Chapters 8 and 20 are the best chapters written in investing history, and I believe he is right. Chapter 8 is especially important, as it discusses in very broad outlines how to value a company and when the price may be right for a purchase. These concepts are fleshed out in tremendous detail in Security Analysis, but Chapter 8 is the best place to start.

Lastly, the writing in this book can be very dry. Hopefully, setting the context here may offset some of that. If it is not good enough, though, I would strongly recommend picking up the reprint of the fist edition: the writing is MUCH smoother in that edition. Interestingly, the first edition is much smaller, which suggests the book suffered from overediting as the years went by.

Hope this helps. The book really does deserve all of the praise it gets. You just need to know the context.

This book is a must have for anyone who has invested in the stock market or is thinking about it. The advices in this book are so simple and logical, yet so difficult to follow in practice because you get caught in the market psychology. I'm sure if everyone followed this book wholeheartedly we would all be richer and we would not see things like the dotcom bubble or the current financial crisis. Furthermore every chapter ends with some comments and updates that makes it relevant even for today's investors (remember this book is almost 40 years old), but still the advices stand the test of time.

I would also like to point out that this book is about value-investment, the idea to find sound companies selling at a bargain, and not technical analysis. But even though you believe in technical analysis I would still recommend reading this book too.

So pick this book up and read it thoroughly before you start investing and follow the advices, else you're almost guaranteed to lose money in the long run!