[Source: 
Hello Steemians,
In this series I will summarize ‘The Intelligent Investor’ by Benjamin Graham. You can expect to learn the principles and foundations of investing which include:
- Minimizing chances of making big mistakes
- Maximizing chances of achieving sustainable growth
- Investor attitude and behaviour towards investing to reach full potential
Terminology & Definitions
Before we move any further, we must also make a distinction between a “defensive” (passive) and an “enterprise” investor. A passive investor is seeking to lessen their decision making and more importantly avoid making serious mistakes. An enterprise investor is willing to dedicate all of his time to his/her portfolio, and meticulously weed out every security to beat the average return on of the market.
In the stock market you can either be a speculator or an investor. Yet, we are certain that no one can make a living by “following the market” buying assets because they have gone up and selling them because they have gone down.
History Repeats Itself
Our approach will be to see the historical performance of the financial markets throughout many decades under different market conditions. A quote Benjamin Graham uses to define this proposition is:
Those who do not remember the past are condemned to repeat it
Simplicity
In his notes, Graham recommended only a 25% investment in stocks and 75% in bonds to a conservative investor in 1964 (Note: at the time bonds returned 2.66% compared to 6.82% of stock market returns). He recommended a 50-50 mix to regular investors.
Check Yourself Before You Wreck Yourself
An investor might think the art of successful investing could be as simple as identifying industries with a high growth potential and further identifying the top companies (stocks) within that industry. It is worth noting that some industries, as exciting as they sound could be disastrous investment options. As an example, the air-transport industry in the 1950’s seemed to be a brilliant investment. The two mutual funds of the industry ended up being huge under-performers, and today it is accepted that “the cumulative earnings of the airline industry over its entire history has been negative”. So always bear in mind:
- Physical growth in an industry does not translate to business profits. As an example, even though the airline industry experienced record number of travellers in the year 1970 the businesses incurred $200 million of losses to their shareholders
- There might be experts who focus on investment options on a single industry, but their focus and knowledge does not always make them correct
The most important takeaway here is for investors not to fall in a situation where they hold their breath for investment gains in a particular industry based on their beliefs.
The fault, dear investor, is not in our stars-and not in our stocks-but in ourselves
Investors Don’t Have to be Smart
Decades and decades of data suggests that investors who establish proper mental and emotional attitudes towards their investment outperform and keep their profits. Many of these “investors” are ordinary people who lack the knowledge of many financial advisors, accountants, and market experts who make big mistakes. Remember, an intelligent investor is one who is patient, disciplined, eager to learn, and can eliminate emotions when making decisions. Even Isaac Newton lost an equivalent of $3 million by buying “South Sea” emotionally.
A Conservative Investing Approach
Graham recommends that the ideal time to sell a stock is when the value of the stock reaches or exceeds the value of all its tangible assets. In some cases, some companies that have spectacular growth prospects may be trading at several times of their tangible asset value, but an investor, he argues, may get too dependable on the volatility and fluctuations of the general market which can easily distract him. A conservative approach would be to invest in a public utility company at about the price of their tangible asset value and enjoy profits on the expanding business regardless of all the market noises.
Conclusions
Certainly the investing lessons of Graham could be applied to cryptoassets. Reading this book again, I wonder whether if my prospects about Crypto are correct. Many people during the dot-com bubble found it hard to believe that you could lose all your money. By 2002, many stocks lost 95% of their value, and that means you must make 1,900% just to get back to where you started. If in January 2018 no price seemed to be too high for crypto, today no price seems to be too low for it either.
More than Bitcoin's price to go up, I like to see an evolution in our monetary system. Perhaps Bitcoin's price is irrelevant to the success of our community, but for that to be true we must be patient to see the results. What are your thought?
There it is. An introduction to “The Intelligent Investor”. I hope you have enjoyed it.
==========================
About my Channel:
Hi Steemians, In this corner of Steem I am finding out the things I will be offering to the community. I have a lot of different passions and I am planning to include these here for everyone to benefit from my experiences. I can not wait until my channel gains more momentum and read your comments and suggestions.
You can expect me to cover the following topics within the next few months:
Summaries important takeaways of the books I am reading
Notes regarding long term goals I have for myself and can be shared with others
Potentially food recipes and tips on cooking
Photography and travelling advice about the places I have visited.
Music I enjoy listening to
For now, I will be focussing on #1, summarizing some of the books I have read such as: The Servant, The Intelligent Investor, CryptoAssets, and How to Win Friends and Influence People. The photos you see on my posts are all taken by myself, unless I include the source (obviously).
Once my channel gains momentum I will be reading all the meaningful comments you leave.
I would like to thank all of you for joining Steem, putting your thoughts and energy on this network by being active. The amount of meaningful content here blows my mind and I am grateful to be a part of it.
As a way to say thank you, I will compile a list of community members here for all my followers. I will encourage everyone in the list to review other's content, comment, and upvote them. Please ask me to include your account in the comments below if you find my content interesting and want more of it.
Thank you,