Investing • Value • Education
The Intelligent Investor — A Complete Guide to Smart Investing
A reader‑friendly walkthrough of Benjamin Graham’s classic, enriched by Warren E. Buffett’s preface and Jason Zweig’s modern commentary. This is an original summary based on the book’s structure and ideas—not a reproduction of the text.
Use the TOC or click each section to expand.
Table of Contents
- Epigraph
- Preface (Warren E. Buffett)
- A Note About Benjamin Graham (Jason Zweig)
- Introduction
- 1. Investment vs. Speculation
- 2. The Investor and Inflation
- 3. A Century of Stock‑Market History
- 4. Portfolio Policy: Defensive Investor
- 5. Defensive Investor & Common Stocks
- 6. Enterprising Investor: Negative
- 7. Enterprising Investor: Positive
- 8. Market Fluctuations
- 9. Investing in Funds
- 10. Advisers
- 11. Security Analysis (Lay Investor)
- 12. Per‑Share Earnings
- 13. Four Listed Companies
- 14. Stock Selection: Defensive
- 15. Stock Selection: Enterprising
- 16. Convertibles & Warrants
- 17. Four Case Histories
- 18. Eight Pairs of Companies
- 19. Shareholders, Managements & Dividends
- 20. Margin of Safety
- Postscript
- Appendices
Epigraph
A timeless nudge to invest with discipline, patience, and an independent mind.
Preface to the Fourth Edition — Warren E. Buffett
Buffett calls this “the best book on investing ever written.” He credits Graham’s principles for shaping his approach: be rational, focus on intrinsic value, and ignore market noise. His message: long‑term thinking beats short‑term excitement.
A Note About Benjamin Graham — Jason Zweig
Zweig sketches Graham as the father of value investing, then connects the book’s mid‑20th‑century lessons to modern markets—showing why the core ideas still work.
Introduction: What This Book Expects to Accomplish
Graham sets out to teach readers to separate investing from speculation, manage risk, and build wealth methodically. Intelligent investing is less about prediction and more about behavior.
1) Investment vs. Speculation
Investment demands careful analysis, safety of principal, and an adequate return. Speculation is betting on price moves. Confusing the two is dangerous.
2) The Investor and Inflation
Inflation erodes purchasing power. Mix assets thoughtfully—equities for growth, quality bonds for stability, and consider inflation‑linked securities where available.
3) A Century of Stock‑Market History
Markets cycle through booms and busts. History favors patient, diversified investors who avoid overpaying.
4) General Portfolio Policy: The Defensive Investor
The defensive investor seeks simplicity and resilience, often via a balanced stock‑bond mix and broad diversification.
5) The Defensive Investor and Common Stocks
Favor financially strong companies with consistent earnings, reasonable valuations, and a history of dividends.
6) Portfolio Policy for the Enterprising Investor: Negative Approach
Steer clear of low‑quality issues, story stocks, and speculative fads. Due diligence first.
7) Portfolio Policy for the Enterprising Investor: The Positive Side
Hunt for mispriced quality via in‑depth analysis—neglected sectors, special situations, or temporary troubles with strong fundamentals.
8) The Investor and Market Fluctuations
Meet Mr. Market: your emotional business partner. Profit from his mood swings—don’t mimic them.
9) Investing in Investment Funds
Understand fees, strategy, and consistency. Index funds can be a powerful default; active funds require evidence of discipline and cost control.
10) The Investor and His Advisers
Align incentives, demand transparency, and measure advisers by process and integrity—not short‑term performance.
11) Security Analysis for the Lay Investor: General Approach
Focus on what matters: profitability, balance‑sheet strength, competitive position, and price relative to value.
12) Things to Consider About Per‑Share Earnings
Reported EPS can mislead. Normalize results, adjust for one‑offs, and read footnotes. Cash flow and returns on capital tell a clearer story.
13) A Comparison of Four Listed Companies
Comparative analysis reveals how quality, growth, and risk differ—so should valuation. Don’t pay the same multiple for different economics.
14) Stock Selection for the Defensive Investor
Use a checklist: adequate size, strong finances, stable earnings, dividend record, moderate price‑to‑earnings and price‑to‑book.
15) Stock Selection for the Enterprising Investor
Look for undervalued assets, special situations, and companies improving returns on capital—always with a margin of safety.
16) Convertible Issues and Warrants
Hybrids offer upside with downside limits—but pricing, dilution, and terms matter. Don’t overpay for optionality.
17) Four Extremely Instructive Case Histories
Case studies illustrate how discipline, valuation, and patience drive outcomes—both good and bad.
18) A Comparison of Eight Pairs of Companies
Paired comparisons sharpen judgment: similar industries can hide very different economics and capital allocation quality.
19) Shareholders and Managements: Dividend Policy
Dividends matter—but so does reinvestment at high returns. Seek candid policies aligned with long‑term value creation.
20) “Margin of Safety” as the Central Concept of Investment
The core principle: buy with a cushion against error, uncertainty, and bad luck. Price below intrinsic value is your protection.
Postscript
Trends change; principles endure. Steady process and skepticism beat fads.
Appendices (Highlights)
- The Superinvestors of Graham‑and‑Doddsville: Buffett’s evidence that Graham’s methods worked across independent investors.
- Investment Tax Basics: Rules evolve; understand how taxes affect your net returns.
- Speculation in Common Stocks & Case Studies: Real‑world examples of discipline vs. hype.
- Tech Companies as Investments: Principles still apply—analyze cash flows, moat, and price.