the intelligent investor book summary in 5 minutes

The Intelligent investor book summary in 5 minutes:-
The Intelligent Investor explains value investing, which is focused on generating steady, long-term profits by ignoring the current market and picking companies with high intrinsic value.

Benjamin Graham would easily be the most famous investor of the 20th century if it weren’t for his student – Warren Buffett – likely the only person to surpass him in investing brilliance.

lesson 1 key principles:

Here are 3 key lessons from Graham’s book to help you start investing: There are 3 principles to intelligent investing: 

1. analyze for the long term, protect yourself from losses, and don’t go for crazy profits.
2. Never trust Mr Market, he can be very irrational in the short and medium-term.
3. Stick to a strict formula by which you make all your investments, and you’ll do fine. Ready to become an intelligent investor? Let’s get going!

warren Buffett never forgets two rules:

Rule no. 1: never lose money

Rule no. 2: never forget rule number 2

lesson 2 never trust Mr market:

Graham’s most famous analogy is one of Mr Market, where he pictures the entire stock market as a single person.

If you imagine Mr Market showing up on your doorstep every day, quoting you different prices for various stocks, what would you do?

According to Benjamin Graham, you’d be best off ignoring him altogether, day in and day out. Sometimes the prices he’d tell you would seem suspiciously cheap, sometimes astronomically high.

That’s because Mr Market is not very clever, totally unpredictable and suffers from serious mood swings.

If you want to be an intelligent investor, rely on your own research and ignore the market altogether.

Lesson 3 stick to the strict formula:

Lastly, to further remove you from the emotional stress of investing with the market, you should always stick to a strict formula when investing.

Graham calls it formula investing, but it’s more widely known as dollar-cost averaging.

What it means is that you simply set a fixed budget you’re going to invest every month or quarter, and then invest that into the stocks you’ve previously picked – no matter the price.

For example, I invest 10% of my income every month. That money goes to my investment account on autopilot and then I invest it in the stocks I already own.

Share it if you are not cheap