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Vivek Verma's Reviews > The Intelligent Investor
The Intelligent Investor
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I had high expectations from the book, which it failed to meet. But then, this book is too old to have a lot of relevance now.
The essence is that an intelligent investor is one who doesn’t think of this as gambling. Do solid fundamental, qualitative analysis rather than looking at charts. Know what the company stands for. And you can’t beat the market.
Maybe if you know nothing about the stock market, then this book is for you to get an idea of what you are getting into and what to expect.
The first 10 chapters were a drag. They should’ve been 10 pages max, with examples. This is the content in it’s entirety:
-No one can beat the market consistently.
-Dollar cost averaging. Invest the same number of dollars in stocks each month. This way you buy more when cheap and less when expensive
-You cannot beat the market even if you are an active investor.
-Think long term, index funds
-Qualitative analysis over speculation
-Diversify. Look for large companies with dividends
-Buy cheap, sell high and NOT vice versa (most people get this wrong)
-purchase of bargain issues
-invest in closed end funds
Couldn’t go through the last 3-4 chapters, since I ran out of patience.
Some notes from chapter 11-16:
Estimating value of a stock:
future earnings.
general long term prospects
management in the company
financial strength and capital structure
dividend record
earning*(8.5+2*growth rate)
Earnings per share:
beware of tricky caveats intended to bump earnings.
learn how to see fishy stuff in earnings.
read backwards, read more, read the footnotes of earnings report.
Things to look at in a company:
Profitability
Stability
Growth
Financial Position.
Dividends
Price History.
Seven statistical requirements for inclusion in a defensive investor’s portfolio:
-Adequate size.
-A sufficiently strong financial condition.
For industrial companies current assets should be at least twice current liabilities—a so-called two-to-one current ratio. Also, long- term debt should not exceed the net current assets (or “working capital�). For public utilities the debt should not exceed twice the stock equity (at book value).
Continued dividends for at least the past 20 years.
-No earnings deficit in the past ten years.
-Ten-year growth of at least one-third in per-share earnings.
-Price of stock no more than 11�2 times net asset value.
-Price no more than 15 times average earnings of the past three years.
The essence is that an intelligent investor is one who doesn’t think of this as gambling. Do solid fundamental, qualitative analysis rather than looking at charts. Know what the company stands for. And you can’t beat the market.
Maybe if you know nothing about the stock market, then this book is for you to get an idea of what you are getting into and what to expect.
The first 10 chapters were a drag. They should’ve been 10 pages max, with examples. This is the content in it’s entirety:
-No one can beat the market consistently.
-Dollar cost averaging. Invest the same number of dollars in stocks each month. This way you buy more when cheap and less when expensive
-You cannot beat the market even if you are an active investor.
-Think long term, index funds
-Qualitative analysis over speculation
-Diversify. Look for large companies with dividends
-Buy cheap, sell high and NOT vice versa (most people get this wrong)
-purchase of bargain issues
-invest in closed end funds
Couldn’t go through the last 3-4 chapters, since I ran out of patience.
Some notes from chapter 11-16:
Estimating value of a stock:
future earnings.
general long term prospects
management in the company
financial strength and capital structure
dividend record
earning*(8.5+2*growth rate)
Earnings per share:
beware of tricky caveats intended to bump earnings.
learn how to see fishy stuff in earnings.
read backwards, read more, read the footnotes of earnings report.
Things to look at in a company:
Profitability
Stability
Growth
Financial Position.
Dividends
Price History.
Seven statistical requirements for inclusion in a defensive investor’s portfolio:
-Adequate size.
-A sufficiently strong financial condition.
For industrial companies current assets should be at least twice current liabilities—a so-called two-to-one current ratio. Also, long- term debt should not exceed the net current assets (or “working capital�). For public utilities the debt should not exceed twice the stock equity (at book value).
Continued dividends for at least the past 20 years.
-No earnings deficit in the past ten years.
-Ten-year growth of at least one-third in per-share earnings.
-Price of stock no more than 11�2 times net asset value.
-Price no more than 15 times average earnings of the past three years.
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Reading Progress
May 14, 2015
– Shelved
May 14, 2015
– Shelved as:
to-read
May 16, 2015
–
Started Reading
May 24, 2015
–
Finished Reading
Comments Showing 1-7 of 7 (7 new)
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Cesar
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Nov 03, 2018 12:31PM
This is a great summary
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I found it brilliant a read where claims were backed up by data and an elaboration of subsequent events. Definitely worth a 4/5 star. If your investment style don't matches with Ben it's fine but this book is a gem for value investors and you definitely can't call it a time waste and rate this book very low.
Your review should be focus on the "book" itself, not the idea inside it. I do agree that the idea of value investing is not relevant anymore with this current situation in stock market. Regardless of that, i still find this book is very useful as another perspective to see how the market works or what many people believe it works (at least in the past).
I realise this is an old review, but why is it no longer relevant according to you?
It's been a while since this book was published, so it may no longer be of much relevance in the current market environmentIf you prefer to use fundamental analysis as your primary method of investing and recognize that investing is not guaranteed to beat the market, this book may give you some valuable insights and strategies
"But then, this book is too old to have a lot of relevance now."You made this claim but then never offered anything to back it up. I completely disagree that it isn't relevant. This book contains timeless principals about investing. Simple because it is a book last updated in the 70's doesn't in itself make it it irrelevant. Just as a Calculus text from teh 70's is not irrelevant, the fundamentals haven't changed.
I know of a few guys still making some bucks by adhering to the core principles outlined in chapters 8 and 20. However, de gustibus non est disputandum.
