Benjamin Graham ( ; May 9, 1894 - September 21, 1976) was an American-born economist, economist and economist professor. He is widely known as the "father invests value," and writes two founding texts in neoclassical investment: Security Analysis (1934) with David Dodd, and The Intelligent Investor (1949). His investment philosophy emphasizes investor psychology, minimal debt, buy and buy investments, fundamental analysis, concentrated diversification, purchases within safe limits, activist investments, and contrarian mindset.
After graduating from Columbia University at the age of 20, he began his career on Wall Street, eventually establishing the Graham-Newman Partnership. After hiring former student and future manager Berkshire Hathaway, Warren Buffett, he took up a teaching position at his alma mater, and then at Anderson School of Management at the University of California, Los Angeles.
His work in managerial and investment economics has led to a modern wave of investment values ​​in mutual funds, hedge funds, diversified holding companies, and other investment vehicles. Throughout his career, Graham has many famous disciples who later received enormous success in the investment world, including Buffett, who described him as the second most influential person in his life after his own father. Such disciples are William J. Ruane, Bert Olden, Irving Kahn and Walter J. Schloss. In addition, Graham's thought of investment has affected people like Seth Klarman and Bill Ackman.
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Graham was born Benjamin Grossbaum in London, England, to Jewish parents. He moved to New York City with his family when he was one year old. After his father's death and poverty, he became a good student, graduating as a salutatorian of his class at Columbia. He refused an offer to teach English, mathematics, and philosophy, instead choosing to take a job on Wall Street, where he finally started his Graham-Newman Partnership. From the beginning, Graham made a name for himself with "The Northern Pipeline Affair," which involved John D. Rockefeller.
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Investment and academic career
His first book, Security Analysis, with David Dodd, was published in 1934. Security Analysis and The Intelligent Investor , published in 1949 (revised- 4), with Jason Zweig, 2003), are the two most widely recognized books. Warren Buffett described The Intelligent Investor as "the best book on investing ever written." Graham urged stock market participants to first describe the fundamental difference between investment and speculation. In Security Analysis , he proposes a clear investment definition that is distinguished from what he considers to be speculation. It reads, "Investment operations are one which, after a thorough analysis, promises principal security and adequate returns. Operations that do not meet these requirements are speculative."
Graham writes that equity shareholders should consider them first and foremost as conferring ownership of a part of a business. With that perspective, shareholders should not be too concerned with the fluctuations in stock prices that are uncertain, because in the short term the stock market behaves like a voting machine, but in the long run it acts like a weighing machine (ie true value will be reflected in its stock price in the long run ). Graham distinguishes between passive and active investors. Passive investors, often referred to as defensive investors, invest cautiously, seek stock value, and buy for the long term. The active investor, on the other hand, is a person who has more time, interest, and perhaps more specialized knowledge to look for extraordinary purchases in the market. Graham recommends that investors spend time and effort to analyze the company's financial circumstances. When a company is available in the market at a discounted price to its intrinsic value, a "margin of safety" exists, making it suitable for investment.
Graham writes that investment is the smartest when it is most straightforward. By that he intends that the stock investor is incorrect or false because the other person agrees or disagrees with it; he is right because the facts and his analysis are correct. Graham's favorite favorite is Mr. Market, a partner who appears every day at the door of shareholders to buy or sell his shares at different prices. Usually, the price quoted by Mr. Market seems sensible, but sometimes it's ridiculous. The investor is free to agree with the price and trade quoted by him, or ignore it completely. Mr. Market does not matter this, and will return the next day to quote another price. The point is that investors should not regard Mr. Market's desire as a determinant of the value of shares held by investors. He must take advantage of the ignorance of the market rather than participate in it. The investor best concentrates on his company's real-life performance and receives dividends, rather than worrying too much about Mr. Market that is often irrational.
Graham was very critical of the corporation in his day due to unclear and irregular financial statements that made it difficult for investors to understand the true state of business finance. He is an advocate of dividend payout to shareholders rather than businesses saving all their profits as retained earnings. He also criticized those who suggested that some stocks are a good purchase at any price, because of the prospect of sustained stock price growth, without a good analysis of the actual financial condition of the business. These observations remain relevant today.
Its contribution spans many fields, one of which is the investment of fundamental value.
Personal life
According to The Snowball , after the death of his son, Graham had an affair with the late girlfriend Marie Louise "Malou" Amingues (who is several years older than her son) and traveled frequently to France to visit her. He later split up with his wife, Estey, after he refused his offer to divide their residence six months each year between New York and France. Amingues are content to live with Graham without getting married.
On September 21, 1976, Graham died in Aix-en-Provence, France, at the age of 82 years.
Legacy
Graham is considered the "father of investment value," and his two books, Security Analysis (1934) with David Dodd, and The Intelligent Investor (1949) define his investment philosophy. , and especially what it means to be a value investor. His ideals of investor psychology, minimal debt, purchasing and buying investments, fundamental analysis, concentrated diversification, purchasing within safe limits, activist investments, and contrarian mindset are then exploited by those affected by it. In a way, his most famous student is Warren Buffett, who since January 2018, is the third richest man in the world. According to Buffett, Graham used to say that he wished every day to do something stupid, something creative, and something generous. And Buffett notes, Graham is superior to the latter.
While many value investors have been influenced by Graham, his most prominent investment students include Charles Brandes, as well as those mentioned above: Schloss, Kahn, Klarman, and Ackman.
Source of the article : Wikipedia
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