The Intelligent Investor Summary & key ideas explained

Early in 1950, a young student at the University of Nebraska picked up a book about the stock market. He was nineteen, and he had been buying shares since he was a boy, still searching for a method that made sense. His name was Warren Buffett, and decades later he still called it by far the best book on investing ever written.

The book was The Intelligent Investor, first published in 1949 by Benjamin Graham, a Wall Street money manager and Columbia professor who had lived through the 1929 crash and the long depression that followed. Graham kept revising it until the early 1970s. The edition most people read today adds chapter-by-chapter commentary by the financial journalist Jason Zweig, who matches Graham's old examples with modern ones.

Here's the surprise: this is not a book about picking hot stocks or reading charts. It's a book about behavior. Graham believed that what separates good investors from bad ones isn't a high IQ or inside information. It's a sound way of thinking, and the temperament to stick to it when everyone around you is panicking or celebrating.

In the next fifteen minutes you'll learn the line between investing and gambling, the simple plan Graham built for busy people, the moody business partner who lives inside every market, and the three words he said hold the whole secret.

But first, a question that sounds easy and isn't: when you buy a stock, are you actually investing?