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Opinions on The Intelligent Investor?
Up to The Intelligent Investor
Opinions on The Intelligent Investor?
Posted by
unknown
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May 02. 2007
First published in 1949, updated by Graham in 1971-72 and reprinted in 1973, The Intelligent Investor is the classic "value investing" bible.
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I've recently revisited "II" after seeing Zweig's annotated edition at the bookstore. It's been several years since I first read it and Zweig's commentary was well worth buying the book again.
Graham seems to change his tune in different parts of II. For instance, in the early chapters, he emphasizes value over price, and even recommends some ratios of share price to book value as a yardstick. He admonishes against putting too much faith in earnings projections. Yet, as you point out, several chapters later, Graham recommends just that.
The Google phenomenon really puts Graham's emphasis on value in perspective! $400 and some change, and analysts are saying just wait, $600 is just around the corner. As Zweig says, most investors simply don't learn from past history.
With regards to dividends, it has always been my understanding that companies that plow their earnings back into the company (rather than paying them out as dividends) are able to take advantage of capital that would otherwise be distributed. Yet several of Graham's examples show dividends as a significant part of a stock's overall appreciation. Is there an implicit assumption that these dividends are used to purchase more stock in the company?
At any rate, a comment about the 75/25 allocation. Zweig (and others) recommend a small allocation in a low-fee gold fund (less than 5%), as well as some diversification in foreign stocks (maybe 20-25%). As Graham puts it, the 75/25 allocation is just a recommendation. (Scott Burns, a syndicated finance columnist, suggests a "couch potato portfolio" of 70/30). In a bull market, the allocation of stocks/bonds would be redistributed for a smaller ratio; in a bear market, the allocation might again approach the 75/25 ratio.
Graham seems to change his tune in different parts of II. For instance, in the early chapters, he emphasizes value over price, and even recommends some ratios of share price to book value as a yardstick. He admonishes against putting too much faith in earnings projections. Yet, as you point out, several chapters later, Graham recommends just that.
The Google phenomenon really puts Graham's emphasis on value in perspective! $400 and some change, and analysts are saying just wait, $600 is just around the corner. As Zweig says, most investors simply don't learn from past history.
With regards to dividends, it has always been my understanding that companies that plow their earnings back into the company (rather than paying them out as dividends) are able to take advantage of capital that would otherwise be distributed. Yet several of Graham's examples show dividends as a significant part of a stock's overall appreciation. Is there an implicit assumption that these dividends are used to purchase more stock in the company?
At any rate, a comment about the 75/25 allocation. Zweig (and others) recommend a small allocation in a low-fee gold fund (less than 5%), as well as some diversification in foreign stocks (maybe 20-25%). As Graham puts it, the 75/25 allocation is just a recommendation. (Scott Burns, a syndicated finance columnist, suggests a "couch potato portfolio" of 70/30). In a bull market, the allocation of stocks/bonds would be redistributed for a smaller ratio; in a bear market, the allocation might again approach the 75/25 ratio.
Current state:
Being created
Read the ,Mary Buffett books on Warren Buffett.
Read all the Peter Lynch books.
Go to The Modern Graham blog.
Lots of Graham picks there.
Go Gurufocus.com - to see GURU value buys.
You need to be a genius in accounting.
Lots of value traps.
Sounds easy but is very hard . Lots of work.
It will rack your brain.
Buffett read 1200 pages of MOddy,s to find 2 stks worth buying.
Read all the Peter Lynch books.
Go to The Modern Graham blog.
Lots of Graham picks there.
Go Gurufocus.com - to see GURU value buys.
You need to be a genius in accounting.
Lots of value traps.
Sounds easy but is very hard . Lots of work.
It will rack your brain.
Buffett read 1200 pages of MOddy,s to find 2 stks worth buying.
Current state:
Being created
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