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| The Intelligent Investor Ch 7-8 |
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Many people say that the best way to learn a subject is to teach that subject. Reading The Intelligent Investor so that I can give you the highlights has definitely made me a smarter investor. If you have any questions or comments don’t hesitate to hit us up at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
Ch 7
For all those would be market timers out there trying to find the ideal moment to buy and sell stocks. STOP! In a study by two Duke finance professors it was found that if you had followed the recommendation of the best 10% of all market-timing newsletters, you would have earned 12.6% annualized return from 1991-1995. If you would have just kept your money in a stock index fund you would have earned 16.4% Speaking of market-timers check out the not-so-great prognostications this well known “stock guru” has made. http://en.wikipedia.org/wiki/Jim_Cramer
Another tidbit of wisdom dropped in Ch. 7 is how to shop for cheap stocks. Graham suggests perusing the Wall Street Journal’s Money & Investing section and looking for companies that have hit new lows for the past year. In today’s market place I’m sure you will find plenty.
Ch 8
In Ch. 8 Graham introduces us to Mr. Market, a personification of the volatile, bi-polar nature of the stock market. Mr. Market falls in and out of love with stocks like a teenage girl. One minute he loves a pick and it is up 25%, the next he hates a pick and it drops 25%. Graham teaches us how to control our emotions, and apply objective reasoning to the flirtations of the market.
Things you can control include:
We have also included the Investment Owner’s Contract provided in Ch. 8. It is your agreement with yourself regarding your investment behavior. Read it, use it, love it!
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