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. The book has 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?" Number one is Mr. Market. Mr. Market is a concept that's value oriented; disciplined investing is what wins in the long run. You should never, ever fall victim to irrational exuberance, understand the valuation of a company. If you're looking at a company to invest in, you have to understand how much that is the company worth. You have to know if the company is trading below its valuation. If it has true value long term, you've invested in the company as a result of knowing that and would not sell, or be bothered, 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 have to continue to buy when people are selling. If you 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 would you sell it just because the market drops due to irrational exuberance. Mr. Market is about the concept of not panic selling. Don't sell when everyone else is and 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 there's no harm in giving yourself just a little more value in buying because our calculations may be wrong. If you think that it's at $10 fairly, then we should give ourselves a margin of safety and hopefully buy that stock at $7-$9 a share. It's just a bit more cushion in potential future gain. Be patient because 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 .