The Intelligent Investor:
Key Takeaways and Analysis All Investors Must Know Before Investing In Their First Startup
Why Is This Book Especially Helpful To Beginner Investors?
Let's talk about a book called "The Intelligent Investor". It's by Benjamin Graham and it's a classic. It's a book that's been used by famous investors, such as Warren Buffet, as well as investors like myself in terms of how we think about investing.
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What are the big points of Benjamin Graham's "The Intelligent Investor: the Definitive Book on Value Investing"? Number one is Mr. Market. M. Market, this concept that value oriented, discipline investing is what wins in the long run. You should never, ever fall victim to what I call, and he calls, irrational exuberance, if the underlying book value in the company are strong. If you're looking at a big company or small company and you want to invest, you gotta understand the book value. What is the company worth? And if the company is trading at below book value and it has true value long term, you've invested in that company as a result of knowing that. Why on earth would you sell just because of the market's daily fluctuations?
How Does The Intelligent Investor Help Startups Pitch To Angel Investors?
If you want to win long term when there's blood in the street, you should not cut yourself. You got to continue. Go buy when people are selling. That's the whole point. Don't panic. Don't sell. If you, again, made the right decision by investing in a company that was trading below book value and you believe that company will be around 20, 30, 100 years from now, why on earth would, just because the market drops due to irrational exuberance, would you sell it? That's what Mister Market is about, that concept. Don't panic. Don't sell when everyone else is. Don't buy high and sell low. That is a losing strategy.
Second thing is margin of safety. It's the central concept of value investing and it's this idea that if you think the stock is valued at $10 per share fairly, again we talked about book value, there's no harm in giving yourself just a little more value in buying, if you're wrong about this calculation. Let's say buy instead, if you think that it's at 10 fairly, we can all be wrong, so wouldn't you set aside a price target of 7, 8, or 9 dollars, hopefully on a $7 range, to buy that stock. Give yourself what's called a margin of safety. Just a bit more extra leeway in potential future gain. Be patient. Patience wins in the long run.
Those are the two points of Benjamin Graham's "The Intelligent Investor". Number one, Mister Market. Don't fall victim to irrational exuberance. Don't Panic. Don't sell when there's blood in the streets. Number two, the margin of safety. Buy lower than you even had expected to buy. That's "The Intelligent Investor". If you want to learn about investing in some of America's top companies, you've gotta check out angelkings.com/invest .