"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.
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