Friday, June 13, 2008

Ben Graham's Intellectual Property Lives On

On what would have been Ben Graham's 100th birthday, a few of his former proteges (Buffett, Schloss and others) participated in an event titled "A Tribute to Ben Graham". They all agreed that Graham had changed their lives by teaching them the principles that were the foundation for their ultra-successful careers in investing.

Here's a summary of some of the wisdom they claimed they learned from Ben, with brackets around who said it:

1) Look at stocks as part ownership of a business (Buffett)

2) Make market fluctuations (Mr. Market) your friend...volatility is GOOD, not bad (Buffett)

3) Margin of safety - building a 15,000 pound bridge if you're going to be driving 10,000 pounds across it (Buffett)

4) You don't have to do anything ridiculously complicated to find undervalued companies...assets don't lie (Buffett)

5) Stocks are easier to deal with than people...they don't argue with you, they don't have emotional problems, you don't have to hold their hands (Schloss, who prefers not to talk to managements of the companies he buys, as he's not confident he can judge them accurately and without bias)

6) Companies with high debt get punished during bad times...the best companies to own aren't leveraged (Schloss)

7) Always have an open mind...that's what allowed Graham to build his great model (Irving Kahn)

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