The intelligent investor invests in a few of those companies, in order to not lose everything when things go wrong and then sits back, being perfectly happy with collecting 10%, 12% or even 15% a year in returns.
The aggressiveness of your portfolio depends less on the kinds of investments you make, and more on the type of investor you are. Benjamin Graham states that there are two ways to be an intelligent investor:
This phenomenon can be seen in the likes of a countless number of investors buying shares in Amazon.com simply because they frequently used its services. By replacing familiarity with thorough research, these investors failed to see that the stocks they were buying were overpriced. Therefore, the more familiar a stock is, the more likely it is to turn an intelligent defensive investor into a complacent one.
If we can take it as a given that the market habitually overvalues common stocks that have been showing remarkable growth, we can assume that it undervalues companies that are not performing quite as well. The key here is for the intelligent investor to locate the larger companies that are going through a temporary period of uncertainty.
Though mutual funds make investing seem easy and affordable, they come with their problems. They often underperform, overcharge, and behave erratically. The intelligent investor must, therefore, choose very carefully before investing in a mutual fund. A group of financial scholars that studied mutual funds for half a century concluded that mutual funds tend to behave under the following:
However, armed with this knowledge concerning the fallibility of mutual funds, the intelligent investor is better equipped to discern a more solid mutual fund from a more volatile one. Further, mutual funds offer the intelligent investor an excellent means of diversifying their portfolio and freeing them up to do things besides endlessly analyzing the market and picking their stocks.
In conclusion, the probability of you making a bad investment during your investment-lifetime is 100 percent guaranteed. Graham is, therefore, adamant that the intelligent investor has ensured themselves against any losses that a bad investment may accrue. Many investors are so sure that they are right, they do little to protect themselves against the consequences of being wrong, and this is fatal for an investor.
The intelligent investor will not do his buying and selling solely on the basis of recommendations received from a financial service. Once this is established, the role of the financial service becomes the useful one of supplying information and offering suggestions.
The calls are transcribed as well as presented in their original audio form, and transcripts are available to be downloaded as PDFs for later use. I will be candid and state that the price tag for this service is somewhat more expensive for a retail investor, but they have a superb 2-week free trial (that doesn\u2019t require card information) that I think everyone should make use of. You can find a link to that below. 2b1af7f3a8