A long time has passed since I last wrote a long article. Well, to avoid of feeling guilty, I would attribute such delay to a lengthy study and digestion of Ben Graham’s book, The Intelligent Investor. (In reality, I never study the book for more than six hours a day, and occasionally I would stop for many days before resuming my reading.)
I have nothing to say on the book as it had introduced me every thought and attitude I needed to succeed as an intelligent investor. Who am I to comment over writings of sages like Graham… I discovered that excellent supplement of Graham’s ideas can be found in Chairman’s Letters written by Warren Buffett, chairman of the board of Berkshire Hathaway and a disciple of Graham. For that, I extracted sections of the letters and compiled it into a “book” (if it could be considered as such) that is excellent in furthering the thoughts expressed in The Intelligent Investor. Here’s a glance of what the “book” contains:
- An Owner’s Manual: a set of 13 original principles, plus an added principle, issued by Mr. Buffett when Berkshire merged with Blue Chip Stamp. Provides an excellent insight of how Mr. Buffett and Mr. Charles Munger managed Berkshire in particular, and how they invest in general.
- Intrinsic Value: introduces the logical approach of determining the relative attractiveness of a business through estimation of discrepancies between the intrinsic value of the business and its book value. Emphasis is also given that a long-term investment should maximize the intrinsic value of a portfolio.
- Issuance of Equity
- Stock Splits and Stock Activity
- Goodwill and its Amortization: The Rules and The Realities
- Dividend Policy
- Three Very Good Businesses (and a Few Thoughts About Incentive Compensation)
- Marketable Securities – Permanent Holdings
- Marketable Securities – Other
- Mistakes of the First Twenty-Five Years (A Condensed Version)
- Mistake Du Jour
- Two New Accounting Rules and a Plea for One More
- Corporate Governance
- Intrinsic Value and Capital Allocation
- Compensation
- Acquisitions
- GEICO Corporation
- Common-Stock Investments
- Unconventional Commitments
- How We Think About Market Fluctuations
- Share Repurchases
Note: For most of the articles I just have the chance to glance through, so no meaningful synopses could be written for them. I shall continue to update the above sections as I read it through.
The twenty-two articles are 46 pages long in aggregate with 10-point Times New Roman in 8.5” by 11” sheets, so it can be considered as highly condensed for discussions ranged as diverse as the topics above.
Conflicts arose within myself as I glance through the articles, moreover as this is the time where I need to decide which courses I like to pursue in the tertiary education. However, the wisdom of Graham suggested that all my conflicts were irrelevant, as investment results depend more on the character of the investors rather than the knowledge that the said investor possess. Honesty and the ability to resist temptations are the qualities I needed most, and also the hardest to incorporate within myself.
I can certainly feel a change of thought as I read through The Intelligent Investor. Before reading the book, all that matters to me are profits and how to take advantage over others (you may refer to my earlier articles that I wrote during the period of insanity). However, as of the current moment, profit, while not being the last thing on my mind, is not the first thing either. Things that matters to me for now are discipline, honesty and patience. It is very clear to me that investment depends not on IQ or exam scores but on the qualities an investor possess.
I suddenly run out of words, so I shall continue to write other time…
