Touted by Warren Buffet as ‘by far the best book ever written on investing’, The Intelligent Investor by Benjamin Graham shares investing gems that can help investors chalk an optimal investment journey.
The Intelligent Investor is a definitive book on value investing. Benjamin Graham introduces valuable investing concepts and shares interesting insights that can enable even the most ordinary investors to become ‘intelligent investors’. Listen to this here on this Podcast by Edelweiss Mutual Fund & learn the investment strategies!
What does it take to become an intelligent investor?
1. A disciplined approach to investing that is tied to a philosophy of in-depth and robust research - It is always best to understand the investments that you make and do some research before making investment decisions.
2. An ability to ignore market noise and instead focus on the long-term value of your investments – In the short-term, asset prices respond to a host of factors that can be misleading and incorrect. Over the long-term, asset prices generally reflect the true fundamental value of the investment.
3. Pay attention to your own risk profile and also the risk profile of the investment – Make investment decisions that adhere to your risk profile. For example, if you are a defensive investor then avoid a high exposure to high risk investments.
4. It is wise to invest in stocks with a good margin of safety - In stock investing, margin of safety is the difference between the intrinsic value of the company and the price we pay to purchase it. The idea is to pay a sufficiently low price for the stock relative to the actual or intrinsic value of the stock. The greater the margin of safety, the more leeway we have for things to go bad - before we lose money.
5. Focus on creating a diversified portfolio that is spread across multiple asset classes – Through correct asset allocation and optimal portfolio diversification, you can reduce the overall risk of the portfolio while maximising returns.