Benjamin Graham (Benjamin Graham) – well-known economist and professional investor. He is often referred to as the "father of value-based investing." (value investing). It is now widely known for its frequent references. Warren Buffett, who at one time studied under Graham at Columbia University, New York State. Buffett talks about, that Graham laid the foundations for wise investment in him, and describes him as a person, who had the greatest impact on ago life after his father.
Benjamin Graham was born 8 May 1894 years in London, his real name was Grossbaum (Big tree). When Graham was one year old, his family emigrated to the United States of America. Benjamin's father opened a company in New York, importing porcelain, ceramics and antiques from Austria and Germany. When Benjamin was nine years old, his father died. Benjamin Graham's personality cemented a poverty-ridden upbringing in New York, where to survive on the street he had to use his mental abilities more, than muscles. Years of poverty, spoke Graham, “Developed my character to be serious about money, willingness to work hard for small amounts and extreme conservatism in all costs ". IN 1914 he received his bachelor's degree from Columbia University, New York State. After graduating from Columbia University, Benjamin Graham was offered teaching positions in three of its faculties: Literature, mathematics and philosophy. However, he needed to support his family, so he took a job at Newburger, Henderson and Loeb on Wall Street for Apprentice Bonds.
IN 1920 G., Age 26 years, Benjamin Graham became one of the partners at Newburger, Henderson and Loeb. Now, besides salary, he got more 2,5% from profit. Graham had already come close to understanding the principle, which he later shared with students: the stupider the market behavior, the more opportunities for a professional investor.
IN 1923 G. group of clients and friends, admired by Graham's successes, proposed to create an investment fund with assets in the amount of $250000 with the condition, what will he get $10000 per year plus 20% from profit. As a result, in 29 years Benjamin Graham founded his first independent enterprise, Grahar Corporation, whose operations began 1 June 1923 of the year. The title was made up of the names of Graham and Louis Harris (Louis Harris), warehouse owner and one of the main investors. Benjamin Graham managed to attract to the fund of order $500000. He was not the main shareholder, but controlled the investment policy of the company, focusing on finding grossly undervalued stocks, overvalued shares, suitable for "short" sales, or profitable arbitrage operations. IN 1925 G. the company ceased to exist, and Graham founded Benjamin Graham Joint Account, whose average annual return between 1925 And 1928 yy. amounted to 25,7%. The business expanded so quickly, that shortly after its discovery, Benjamin Graham needed a partner, who would take over the administrative functions. He invited Jerome Newman, brother of his childhood friend. So was born Graham Newman Investment Fund.
Since at the end of the 20s. the popularity of investment funds has increased, Benjamin Graham took up the organization of the trust fund Hentz-Graham, which had intended to launch in September 1929 G. However, by this time, the securities market began to "burst at the seams", and soon Graham was not up to the new fund. He also turned down a partnership offer with Bernard Baruch. (Bernard Baruch).
For 1929 And 1930 year professional investor and trader Benjamin Graham lost more than half of the fund's funds. By drawing the appropriate conclusions and abandoning the most aggressive and high-risk deals, his company was able to survive the Great Depression.. The average annual profitability of the company for the period from 1929 G. on 1956 G., when Graham retired, составила порядка 17%.
IN 1934 year was published книга “Analysis of securities” (” Security Analysis ”), written by Бенджамином Грэхемом co-authored with David Dodd (David Dodd). “Analysis of securities"Is still considered the" bible "for investors and traders around the world, it laid down the principles of "value" investment, based on the use of fundamental indicators in the process of stock valuation. Graham and Dodd also pioneered the concept of "intrinsic value" (intrinsic value).
IN 1949 the book “Intelligent investor” (” The Intelligent Investor ”), in which Benjamin Graham explained from the perspective of a professional investor, how a rational approach allows you to stay ahead of the market. He also showed, what principles should be guided by investors and traders, and how can you determine, that stocks are undervalued. Warren Buffett counts the book Benjamin Graham “The Intelligent Investor"The best investment book ever written.
Benjamin Graham died at night 21 September 1976 of the year, Age 82 years.
Graham urged the investment community to make a fundamental distinction between investment and speculation. He defined professional investors as people, carrying out operations, based on careful analysis of the facts, перспектив, safety of invested funds and sufficient income. Everything else was considered speculation.
Benjamin Graham wrote, that a professional investor and shareholder should treat them, first of all, how to your share in the business. Держа это в уме, the investor does not have to worry about stock price fluctuations, because in the short term, the securities market behaves like a “voting machine”. In the long term, the market behaves, as "scales" – the intrinsic value of a share is ultimately reflected in its price.
He recommended professional investors to concentrate their efforts on analyzing the financial condition of companies.. When a company's shares are traded in the market at prices below their intrinsic value, there is t. н. safety margin (margin of safety), which makes them attractive for investment.
Benjamin Graham wrote, what is the most reasonable investment, when it most resembles a business venture. Warren Buffett speaks of these words as the most important, ever written about investing. Graham says, that the only thing that matters is the correct analysis, основанный на достоверных фактах, and the consent or disagreement of other investors is secondary.
