Вы находитесь на странице: 1из 3

Lesson #19: Three Investing Legends and Their

Three Big Ideas


"f at all have been able to see any further, it is because have stood on the shoulders of giants, said Sir saac
Newton. He was spot on given that most of the big things we do in our lives are generally inspired by someone else
someone we idolize, or someone who trains us.
n my career and life of the past eight years, have come across several giants people who have lent their helping
hands in training me in investing and stock market research.
But my best teachers all these years have been three people, whom have never met personally, but have seen them
through books written by/on them.
These teachers are Benjamin Graham, Philip Fisher, and Warren Buffett the legends in the field of value investing.
While Graham and Fisher are no longer alive, Buffett continues to amaze me with his wit and wisdom on investing and
how he handles his investments.
This lesson is a dedication to these three legends. t also discusses briefly the one big idea (each) that has come to be
the hallmark of their investing philosophies.
Benjamin Graham (1894-1976)
The Iegend: Graham is also known as the father of value investing. His biggest contribution to the investing world has
been his two books that were published almost eight decades ago. The first Security Analysis was published in
1934.
As the name suggests, it was meant for people who wanted to understand the quantitative analysis part of buying an
investment, whether a stock or a bond.
Graham's second book The ntelligent nvestor came out in 1949. Now this is the most widely acclaimed book on
value investing and has been described by Warren Buffett as 'by far the best book on investing ever written'.
Graham wrote this in extremely simple manner, so that the man on the street can understand it, and incorporate the
learning in his investing.
Graham's big idea: The investing world sums up in three simple words margin of safety. These are also the three
most important words for an investor. We studied the concept of margin of safety in lesson eight of this series on Value
nvesting for Smart nvestors. So won't go in much detail again.
But in simple terms, margin of safety is the difference between the intrinsic value of a stock and its market price. t is like
paying Rs 50 for a stock that is worth Rs 100, so that even if the actual worth is Rs 80, your buying price of Rs 50 is still
much less and won't lead into trouble if the stock were to fall.
Anyways, margin of safety was not the only big idea that came from Graham. He is inarguably called the father of vale
investing. And just like any devoted father, this man has contributed a lot the founding and development of this field of
sensible investing.
And you can grasp all his learning by just reading The ntelligent nvestor, and also by following Safal Niveshak where
we will discuss a lot about the man, and his ideas.
Let's now turn to another doyen of the value investing field, Philip Fisher.
PhiIip Fisher (1907-2004)
The Iegend: Though not as widely known as Graham, Fisher has also contributed remarkably towards the development
of value investing. He is best known for dispelling his learning through his famous book Common Stocks and
Uncommon Profits that is a must-read for all value investors and those who are trying to learn the art.
While Graham was more of a quantitative investors deeply analysing the numbers before buying his stocks Fisher
add the tinge of qualitative aspects to the field. Graham, for instance won't buy a stock trading at a P/E higher than 15
times, no matter what the quality of the company was.
Fisher, on the other hand, was all for paying a higher price (though not very high!) for a quality business.
Fisher's big idea: He called it 'scuttlebutt'. Simply explained, it means keeping your mind, eyes, an ears open while
studying a company. This involves meeting the company's management, its competitors, buyers and suppliers to take
an all-round view of the company. XYZ
Warren Buffett (1930)
The Iegend: Buffett is inarguably the best practitioner of the value investing ideas laid out by Graham and Fisher. He in
fact calls himself '85% Graham and 15% Fisher'! While not much information is available regarding the investment
returns and wealth of Graham and Fisher, Buffett's story is an open book.
Adhering to the value investing principles that he learnt from these two masters, Buffett has grown his wealth at an
average annual rate of over 20% during the past 45 years. While this number might not mean much at first, it is enough
to grow every Rs 100 invested into Rs 3.6 lac over a 45 year period. This is unmatched by any other investor, living or
dead.
Buffett's big idea: While most of Buffett's ideas are what he learnt from Graham and Fisher, the simplicity with which
he has passed on these ideas to generations of investors is what is his biggest idea. Buffett's annual letter to the
shareholders of his company Berkshire Hathaway are considered a must read for any investor, analyst, or fund
manager just starting out.
These letters that come out at the end of February each year (here's the latest letter), contain a wealth of investing
ideas and how Buffett practices them to invest his company's money. These letters are the ultimate epitome of
selflessness from the man who has been the most generous in passing over his legacy to the investing world.
With this, we come to the end of this educational series on value investing. hope 'Value nvesting for Smart nvestors'
has really made a worthwhile and easy reading for you.
Value investing is a very vast field and will not claim to have covered all aspects of it through this series.
But it has been my sincere effort to include all the major ideas from the field that can be part of every sensible investor's
toolkit.
P.S.: Got here via a link from a friend, or a forwarded email? This is the nineteenth lesson of the 20-lesson free email
course on the essential pillars of becoming a successful investor, Safal Niveshak-style. We talk about simple investing
strategies that will work for you, and make you a smarter and successful investor.
Learn more about the course or simply sign up here.

Вам также может понравиться