---
title: "Benjamin Graham, Value Investor"
description: "The Benjamin Graham value investing strategy is still one of the best ways to make money with stocks in the market today."
canonical_url: https://trendshare.org/how-to-invest/benjamin-graham-value-investor
markdown_url: https://trendshare.org/ai/benjamin-graham-value-investor.md
published: 2012-08-25
last_updated: 2020-12-31
content_license: https://trendshare.org/about/disclaimer
---
# Benjamin Graham, Value Investor

Source: https://trendshare.org/how-to-invest/benjamin-graham-value-investor
Updated: 2020-12-31
Benjamin Graham's 1949 book [The Intelligent Investor](http://www.amazon.com/gp/product/0060555661/ref=as_li_tf_tl?tag=trendshare0c-20) is the classic book on value
investing. Warren Buffett, possibly the world's best investor, called this book
"the best book about investing ever written." That's high praise!

## Who is Benjamin Graham?

[Benjamin Graham](https://www.forbes.com/2009/02/23/graham-buffett-value-personal-finance_benjamin_graham.html) was an economist and a professional investor. In his book
*Security Analysis*, he and David Dodd developed and refined a stock
market strategy. Value investing is the systematic analysis of the financial
strength of companies and their ability to produce revenue, profit, and growth
through normal business operations.

Where some investing might be speculation ("We believe this stock will be
worth more in the future because we hope people want to pay more for it in the
future"), Graham's principles include research, knowledge, and safety. He
encourages investors to think of themselves as owners of a business. Just as
you would do your homework before buying a restaurant, factory, or consulting
business, so should you examine the financial health and prospects of a
stock.

The concepts of [intrinsic value](https://trendshare.org/how-to-invest/what-is-intrinsic-value) and
the [margin of safety](https://trendshare.org/how-to-invest/what-is-a-margin-of-safety) come directly
from Graham.

## What is Benjamin Graham Value Investing?

Perhaps Graham's most important insight is that investing in a stock can and
should be like owning part or all of a business. [A business has value because of the money it can produce for its owners now and in the future](https://trendshare.org/how-to-invest/earnings-matter-most). The appropriate price for a
stock—a fraction of ownership of the company—thus depends on the
money the company can produce.

This is the core of [value investing](https://trendshare.org/how-to-invest/what-is-value-investing).

Though this work is decades old, the relevance of security analysis is
higher than ever. Even as [the market exhibits wild fluctuations](https://trendshare.org/how-to-invest/what-happened-in-the-stock-market-today) almost every day, [the price of a stock over the long term still depends on the strength of the business](https://trendshare.org/how-to-invest/buy-and-hold). By following Graham's principles, smart
investors can make wise decisions based on facts, not fear, and will make money
in the market.

Of course, you must first understand [how to invest in the stock market](https://trendshare.org/how-to-invest/how-to-invest-in-stocks). Yet even as Graham's tome is full of
pen-and-paper exercises, the principles of his approach have spread far and
wide.

## Does Value Investing Still Work Today?

Yes! Some of the best investors in the world—Warren Buffett and
Charlie Munger—studied Graham's approach. They put their own spin on
things. In fact, Buffett's insight takes Graham's strategy one step further.
Where Graham might buy a good stock when it's undervalued and sell it when it's
overvalued, Buffett prefers to [avoid unnecessary investing costs](https://trendshare.org/how-to-invest/broker-fees) altogether by never selling great stocks.

That's the start of good investing, and in 2021 you have an advantage that
Graham and younger Munger and Buffett never had. The Internet's leveled the
playing field in ways perhaps those investors could never have imagined.
There's a wealth of information at your fingertips and a tremendous amount of
computing power in your hands right now. Where Benjamin Graham had to fill in
charts and graphs himself, a few minutes and a spreadsheet could help him
figure out important statistics like "What's the right price to pay for a
stock?" and "What's discounted cash flow?" and "What's a good price for a share
of this company with a [margin of safety](https://trendshare.org/how-to-invest/what-is-a-margin-of-safety)?

The most fun part of investing is watching your money grow, and the second
most enjoyable part is figuring out great stocks to buy at good prices. Now you
can use computers to do the boring numerical analysis for you. Start with [learning about free cash flow](https://trendshare.org/how-to-invest/what-is-free-cash-flow) and you'll soon
be on your way.