The first time I read The Intelligent Investor, by Benjamin Graham, was in 1997 while working at Fidelity Investments. The book was a Christmas gift from my future father-in-law Dick Young. I have two copies today.
One is the 1973 version that sits in my office and is the one I’m working out of today, and the other is a later version edited by Jason Zweig that is spiral bound, making it easy to lay flat to take notes.
In my conversation with Dick yesterday, we discussed Chapter 1: Investment versus Speculation: Results to Be Expected by the Intelligent Investor. “You don’t need to read much more than that title,” he said. “I’ve been doing this since 1971, and it never fails to amaze me how folk are separated from their money.”
As Graham points out, anyone who buys a stock is not an “investor.” Wall Street has used the term loosely since the beginning. Everyone was an “investor” during the Roaring 20s right on up until 1929 when, during the Great Depression, you couldn’t find an “investor” anywhere. Those so called “fools” considering buying stocks say in 1934, a great time to do so, were considered reckless.
Another book I’m staring at in my office is Graham’s, Security Analysis, co-written with David L. Dodd in 1934. In the book, they attempt to define the term investment versus speculation, writing, “An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
Today, you can see who the investors are and who the speculators are. Time has a way of making the distinction between the two ever so cruel. Such is human nature.
Action Line: If you’re serious about being an investor, we should probably talk. Email me at ejsmith@yoursurvivalguy.com. And subscribe to my free monthly Survive & Thrive letter by clicking here.
Originally posted on Your Survival Guy.
