Intelligent Investor
Woody Rittmiller
Final Executive Summary
12/6/13
The book, Intelligent Investor, written by Benjamin Graham, has over the years become one the most highly praised guide for investors to better themselves as investors. Globally recognized investor, Warren Buffet, has been quoted as saying that it is best book on investing ever written. He thinks, specifically in investing, that chapter eight of the book is the most important chapter ever written. Graham writes, in chapter eight, about how an investor should react to market fluctuations. In order to take full advantage of these certain market fluctuations, the investor must be financially and psychologically prepared for them. In this chapter, the two ways to take full advantage of fluctuations are introduced. One possible ways to potentially profit from fluctuations in the market is the way of timing. Timing can simply be described as buying a stock when it is thought that the price will increase, and then selling that stock when the price actually does increase. The way of pricing is the other way to profit off of fluctuations. The strategy of pricing is buying a stock when the price is thought to be below fair market value, and then selling when it reaches or exceeds fair market value. Similar to Graham states that it is possible for an investor to have some success relying solely on pricing, but if timing is his main strategy, it is likely that he will end up as just a speculator, earning much lower returns than what was expected. The intelligent investor will disregard any noise he hears regarding market forecasting, for it is illogical to think that it would be possible to profit off of something known by the general public. The investor, as opposed to the speculator, will wait to purchase the stock at a significantly lower price, and thus erase any of the losses accrued. By definition, timing sounds like it would be a good strategy, but if not included with some form of pricing, it
Final Executive Summary
12/6/13
The book, Intelligent Investor, written by Benjamin Graham, has over the years become one the most highly praised guide for investors to better themselves as investors. Globally recognized investor, Warren Buffet, has been quoted as saying that it is best book on investing ever written. He thinks, specifically in investing, that chapter eight of the book is the most important chapter ever written. Graham writes, in chapter eight, about how an investor should react to market fluctuations. In order to take full advantage of these certain market fluctuations, the investor must be financially and psychologically prepared for them. In this chapter, the two ways to take full advantage of fluctuations are introduced. One possible ways to potentially profit from fluctuations in the market is the way of timing. Timing can simply be described as buying a stock when it is thought that the price will increase, and then selling that stock when the price actually does increase. The way of pricing is the other way to profit off of fluctuations. The strategy of pricing is buying a stock when the price is thought to be below fair market value, and then selling when it reaches or exceeds fair market value. Similar to Graham states that it is possible for an investor to have some success relying solely on pricing, but if timing is his main strategy, it is likely that he will end up as just a speculator, earning much lower returns than what was expected. The intelligent investor will disregard any noise he hears regarding market forecasting, for it is illogical to think that it would be possible to profit off of something known by the general public. The investor, as opposed to the speculator, will wait to purchase the stock at a significantly lower price, and thus erase any of the losses accrued. By definition, timing sounds like it would be a good strategy, but if not included with some form of pricing, it