The man credited for shaping Warren Buffett

Fsp Invest, 23 Aug. 2013

Tags: benjamin graham, warren buffett, value investing, graham, investor greats, who was benjamin graham



Benjamin Graham is probably the least recognised of the investment greats. Yet, he has garnered acclaim as the man who ‘shaped’ Warren Buffett during his early years. Read on to find out what you can learn from Benjamin Graham…



Benjamin Graham was no slouch as an investor.

His portfolio returned around 17% per annum over the very difficult period starting in 1926 and running to around 1956, Gareth Stokes explains in Fear, Greed and the Stock Market.

If you doubt his ability, you would do well to recall this period included the Great Depression (from 1929) and the whole of World War II.

An ultra-conservative investor, Graham is the father of the value investing strategy.

He would spend his time searching for under-priced companies – buying stock while the prices were on the rocks – and then waiting for the true value to be realised.

Investors most remember Graham for the work he did on fundamental analysis. He was instrumental in making ratios such as price to earnings and debt to equity popular.

His followers soon learned how important it was to run the numbers, focusing on net asset value, dividends, book values and historic earnings too.

Graham was instrumental in leading the way for other investor greats

Graham may not be as high league as Warren Buffett for instance. Graham’s claim to fame lies more in his writings and the platform he laid for other investors.

In 1934 he co-authored a hefty textbook called Security Analysis, which students still use in business schools today.

Warren Buffett thinks Benjamin Graham is responsible for “by far the best book about investing ever written”. The name of this book is The Intelligent Investor.

You should make an effort to read this as part of your ongoing investor education.

There you have it, what you can learn from Benjamin Graham.


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