The Intelligent Investor by Benjamin Graham is probably one of the most well known books on investing and even inspired a young Warren Buffett. The book was originally written in 1949 although there is a revised version. The difference between the original and the revised version is that the revised version has commentary on how some of the comments in the book have translated over time. Let’s assume the revised version doesn’t exist for now and take a look at the original book just to see how relevant it still is today. Of course, if you were buying the book it’s probably a good idea to get the revised version, i digress.

Firstly, there are obviously a few things Ben Graham never could have predicted: 

Currency

When the book was written in the 1940s the US was still on the gold standard which has since been transferred over to fiat currency in the 1970s. 

The Internet 

There’s no way Ben Graham could have predicted what would happen with the internet and technology and how we would all become connected on a global scale.

The book covers 20 chapters from everything to inflation to stock picking, naturally some of the chapters here aren’t that relevant, for example the chapter on a comparison of 8 companies. Whilst there are still some good points in there companies have changed so much since the 1940s. What qualifies for a safe and reliable investment choice has changed over time, Ben Graham used incredibly conservative ratios and numbers that can’t really be translated into today’s market. To be fair to Ben Graham he does justify his figures and highlights the biggest issues for picking stocks so there is still some relevancy. 

Ben Graham also has a chapter on inflation which isn’t as relevant to today. Graham recommended bonds in ones portfolio to partner securities but in the years leading up to the book there were periods of negative inflation and bonds seen significant gains. Bond returns have been very poor lately and whilst they can help reduce the blow of a market crash or might be a good idea if you’re planning on retiring soon they probably won’t see similar returns to bonds in Grahams day for many years to come. Graham does offer relevant opinions on how to utilise inflation to your advantage which could still be used today. 

Surprisingly, there are some chapters in the book that are almost entirely relevant to today. This is because their based on general practises, human psychology and decision making which hasn’t really changed in the stock market. 

In an interview, Warren Buffett was asked if the intelligent investor is still relevant today and  Buffett named three takeaways from the book which are still as relevant as ever. The first was attitude to stock market fluctuations, if you can stomach market fluctuations and understand that the market will always go up and down you will do better than 99% of investors. The second is the margin of safety which Buffett argues has applicability beyond the investment world, and the third is looking at stocks as businesses which gives you a different view than most people in the market. Peter lynch also has a similar opinion on viewing stocks as businesses and he did rather well for himself comfortably beating the market as a fund manager. 

There’s no doubt much of the book is still relevant today which is quite an amazing thought considering it was written over 70 years ago.

If you want to read the Intelligent Investor you can find it on Amazon here.

The views expressed in this post are the authors and should not be construed as financial advice

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Author

David is an Engineer and Finance Writer educated to masters degree level with sound knowledge in investing, the stock market and personal finance. We hope the information provided on this site can help you achieve your financial goals.

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