Who Is Benjamin Graham?

Benjamin Graham was an English-born economist, investor, and securities researcher who pioneered value investing based on in-depth fundamentals research. Graham’s groundbreaking novels erected the framework for modern stock analysis and a diversified buy-and-hold investment philosophy. 

Quick facts

Name: Benjamin Graham (born Benjamin Grossbaum)

Nicknames: The (God)Father of Value Investing; the Father of Security Analysis

Date of Birth: May 8, 1984 in London, England

Education: Columbia University

Net worth (time of death): Estimates range from $3 million to over $50 million 

Partner(s): 

• Hazel Mazur (married 1917-1937)
• Carol Wade (married 1938-1939)
• Estelle Messing (married 1944-Graham’s death)
• Marie-Louise Amingues (partner ~mid-1950s-Graham’s death)

Investment strategy: Value; buy-and-hold

Known for: 

• Laying the groundwork for modern stock analysis and value investing
• Distilling his investment wisdom into his novels Security Analysis and The Intelligent Investor – the latter is considered the “investor’s bible”
• Mentoring famous investors like Warren Buffett, Christopher Browne, Irving Kahn and Walter Schloss
• Establishing three “principles of investing” to help investors achieve success

Notable facts:  

• Graduated second in his class from Columbia University after just two years
• The only person ever offered professorships from three separate departments at Columbia: English, math and the classics (philosophy)
• Earned ~$500,000 per year by 25, then lost most of his net worth in the stock market crash of 1929

Famous quotes: 

• “The intelligent investor is a realist who sells to optimists and buys from pessimists.” 
• “Successful investing is about managing risk, not avoiding it.”
• “Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”

Early life

Benjamin Graham’s father died when he was 9, leaving his mother to care for the family financially. When she opened a margin account to better her family’s fortunes, the Bank Panic of 1907 wiped out the family’s savings. Despite these misfortunes, Graham won a scholarship to Columbia University and graduated second in his class in two years.

Growing his name (and fortune)

After graduation, Graham turned down three professorships at Columbia to work on Wall Street. He quickly built his way up to a partnership earning $500,000 annually by the mid-1920s. He also eventually accepted a position teaching finance at night at Columbia University, where he would later mentor Warren Buffett. 

Unfortunately, the stock market crash of 1929 nearly wiped Graham financially. However, the lessons he learned prompted him to co-author his first novel: Security Analysis. 

Security Analysis

Security Analysis argued for analyzing stocks through a non-speculative lens by considering a company’s fundamentals (underlying operations and finances). This analysis lets investors find a company’s “intrinsic” value. Graham believed that buying shares when prices sit below their intrinsic value – i.e., value investing – gives investors a “margin of safety” in their portfolios.  

The Intelligent Investor

Graham soon found more success. And in 1949, he distilled even more wisdom into The Intelligent Investor: The Definitive Book on Value Investing, widely considered the “investor’s bible.” 

The book establishes the persona of Mr. Market to stand-in for the stock market. Using Mr. Market, Graham imparts important lessons like:

• Buying on your own research rather than fear or greed
• Expecting and taking advantage of market volatility
• Not buying stocks for their popularity
• Guarding against creative corporate accounting tactics

Legacy 

One of Benjamin Graham’s greatest legacies are his three “principles of investing”:

• Always invest with a “margin of safety” (value investing)
• Learn to expect and profit from volatility (buy low, sell high)
• Know what type of investor you are

Novel at the time, his approach treated investing with a clinical, critical eye, rather than as a speculative vehicle. And though he died in 1976, his tactics and principles have brought countless others – including the great Warren Buffett – enormous success.