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Personality of the Week- Benjamin Graham

 

Benjamin Graham was the most influential value investor  of the last century.He was the teacher of Warren buffet.Benjamin Graham was born in London in 1894.He started teaching value investing tips and techniques to his students during his teaching job in Columbia University.Later he partnered with David Dodd to revamp is value investing theory.His value investing tips and techniques are still very popular among stock market investors.

Early Days and Education

Benjamin Graham was a British born Jew. He migrated to New York in his childhood.He graduated from the Columbia university at the age of 20.Later in 1916 ,he started  a job  in Wall Street.He started Graham-Newman Partnership there.During this he also started a shareholders awareness movement through his revelations about the Northern Pipelines. Northern pipelines was hiding real value of shares from its shareholders..This awareness movement was known as “The Northern Pipeline Affair” .This movement was one of the most successful shareholders activism of that era.

Northern Pipeline was forced to give $50 in cash to the shareholders.It also promised its shareholders to give  $20 more in near future. After this activism, investors started receiving $110 /share in distributions from Northern Pipeline. “The Northern Pipeline affair ” made Graham extremely popular among the shareholders and investors.They took him as the most effective shareholders activist of that era.

Career

Benjamin Graham wrote book named”Security Analysis” in 1934 and then wrote ” The intelligent Investor” in the year 1949.These two books are considered landmark books in the history of investing. These two books laid down the foundation of the investment in real sense. Benjamin Graham taught the real meaning of investment to the stock market investors.He said “An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”Graham always advised stock market investors to regard themselves as the part owners of invested company.This thinking helps investors to successfully devise long term investing strategy.

Graham gave different terminologies to the stock market world. Intrinsic value and margin of safety are his two most important terminologies. According to him ,a stock available less than its intrinsic value is the best investment option.There is every chance that this type of stock will generate good return for investors in future.

Benjamin Graham was not happy with the financial reporting of the companies.He believed that their tricky reporting made it difficult for the investors to analyse the company financial statements in correct manner.He supported companies ,who paid handsome amount of dividend payments to the shareholders. He always advised investors to carry out  a detailed stock analysis before investing in a particular stock.

Legacy

Benjamin Graham left a very strong legacy behind him.Benjamin Graham left a long list of well known students.This long list of students include William J. Ruane,Walter J. Schloss,Warren Buffet and Irving Kahn .Warren Buffet consider him most influential person in his life. Warren Buffet even named his son after Benjamin Graham.

Most of stock market experts consider him ” The father of value investing”.They also believe that studying Graham is important for investors , just like studying Newton is important for scientists.

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About Emaad Qureshi