Benjamin Graham's book, The Intelligent Investor, is a classic in the literature when it comes to making sound investments and managing finances. For those unfamiliar, Graham mentored one of the greatest investors of our time, Warren Buffett, who is the principal shareholder of Berkshire Hathaway. This is one indication that if the greatest investor learned something from Graham, his book must contain valuable lessons.

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Why should you read The Intelligent Investor ?

Although I haven't read the original 1949 version, it remains a benchmark when it comes to common-sense investing. The version I read is annotated and incorporates some of the original's references into today's world. A key point for any finance book is to extract the basic and universal concepts that work in any situation, and The Intelligent Investor does this masterfully, addressing concepts like margin of safety, defining what constitutes an investment and speculation, outlining strategies for aggressive and conservative profiles, discussing capital allocation, and many other fundamental concepts for anyone, whether an investor or not, since margin of safety, for example, can be applied daily.

One aspect I consider somewhat negative, but understand is necessary, is the use of examples based on events that occurred during Graham's time as an investor. These contextualizations can make the reading a bit tedious, leading one to want to skip those parts and move on to the explanation of concepts. Besides being tiring, these contexts require a high level of attention and the ability to bring events into the present; they demand an understanding of what happened and thinking about what is happening or could happen that is similar.

[Amazon]

In any case, the book is incredible as a reading for learning the concepts, and also the history of Graham's time. In an era where social media is full of tricks, magic formulas, and investments with high returns, having the support of a classic to help you is fundamental. Graham's various concepts as references are based on common sense that people end up forgetting when investing, the greatest example being Margin of Safety. When buying an asset, you wouldn't buy it at its peak, since you're paying more than it's worth; you wouldn't buy it at its true value, because if it falls a little you're already negative; but if you buy it a little below its real value, then you have a "MARGIN" that gives you "SECURITY" in case there is a fluctuation in value. Do you understand how simple it is, but that nobody usually does or thinks about?

To give you an idea of ​​what you'll find in the book, right at the beginning is the definition of investment: "An investment operation is one that, after in-depth analysis, promises security of the invested capital and an adequate return. Operations that do not meet these conditions are speculative." Just following this simple concept, and understanding the difference between investment and speculation, already allows you to avoid falling for many scams.

This is because you will immediately ask yourself: 1) Will the capital be safe? This will lead you to thoroughly analyze the project before investing. 2) Adequate return. This avoids false promises and also helps you choose investments with low returns. A tip is to observe how much the safest possible investment is paying, which is usually the country's debt security, and look for something close to that.