Can you provide review of Intelligent Investor book?

The Intelligent Investor is the famous book written by Benjamin Graham and it was first published in 1949. Thereafter many editions of the book were printed and were very popular in the people interested in investing. Benjamin Graham died in 1976 but his book remained there as a great motivation for the investors.

Benjamin believed that market was there to offer the investors some share at some price everyday but it was the investor who had to decide as what to buy and what to sell at an opportune time and that is what is known as the investment skills and those who possess it were the real players in the market benefiting by its ups and downs. He also opined that the investor should have a good knowledge of the companies and working status where he is putting the money in the stocks of those companies and if the companies did not fare well there was no point in that risky investment. Warren Buffet, the great successful investor believed in these principles and in fact wrote the preface and appendices of the 4th edition of the book printed in 1973.

The book contains a great deal of discussions on speculation versus investment and also gives a detailed account of market in the historical past to highlight the performance of the stock market over a considerable time period. It also suggests how an investor chooses between the common stocks and risky stocks and accordingly builds a portfolio. The author has described the hidden risks and market fluctuations with which the investor should be aware with and should not panic as these are the ways of the market and with daily fluctuations some traders make money and some of the daily traders are benefited. There are also guidelines in investing in funds rather than the stocks themselves and how that is different from direct stock market investment.

The author has further discussed the role of financial advisors in the game of investing and how they can help the investors in this regard with their experiences and historical knowledge. What margin of safety is to be observed by a common investor is also explained in the book. The book provides a great deal of information on the earning per share (EPS) which is a very important parameter and reflects the return on each of the shares held by the investor. It is the EPS on which the final dividend declaration of the company is based for the benefit of the investor. The book also provides many case histories and example which help us to learn the difficult act of investing.

"The Intelligent Investor" by Benjamin Graham, can be treated as the best book on investing written in the year 1949 after a deep study of the stock market history of the 49 years and gave his conclusion that focussed and value investing principles with the assumption that the market will continue to do so would help any person to get a good result.

There are six key principles that the author Benjamin Graham has explained in detail in his book, "intelligent investing". They are as follows:
1. One should know about the business that one is investing in.
2. The investment must be made on the root value and not on the popularity of the company.
3. Always study the company on which you are investing and everything about the company and its business.
4. Make a proper study and have trust in your observation and evaluation.
5. Always keep a margin of safety with every stock you invest.
6. Always invest in a long time profit than making a quick deal in buying and selling of shares.

The book also gives a detailed analysis of investing in stock markets and the formula to be a good investor apart from just investing. Many people buy shares as an investment without any research, market study or having blind faith in their friends or brokers.

i) The book tells that the main motto of an investor must be "Never lose money". It means that an intelligent investor does a thorough analysis of stocks, the company's history, their management values and the change between the current price and built-in value of the company that can help in collecting 10%, to 15% returns in a year.
ii) It again mentions that no one can predict the market as the price of the stock that was high today can be cheap the next moment or the next day. It means that one must count on their research and analysis and ignore the current trend or fluctuations of the market.
iii)One must always follow a strict rule what the author calls 'formula investing'. It is just like making a Recurring deposit, the same way, one needs to budget or fixed amount that he invests every month for stocks. The amount should be steady and fixed irrespective of the stock value or market fluctuation. This will help to maintain the flow when the stock market price is high or low. This helps to protect losses in the case of a market crash when a big sum is invested at one time.

The book also gives an understanding of making a portfolio, adjusting and exacting portfolio allocations, need of keeping a margin of safety for every stock, risky investments, intelligent investor approach and making a risk-free investment by oneself.