Free speech December 28, 2021


Then in 1949 I read the Intelligent Investor by Benjamin Graham. … There are really only two chapter in that book that are the key to it.
But they set my philosophical framework for investing in three ways. They are so basic and so simple …


1. The first is that a stock is a part of a business. … You value a business and then you divide by the shares outstanding. But what you have to think about is what kind of business are you getting into. What are its economic characteristics for its competitors. What’s its management is like. …. I had to decide … how do you value a business. What counts?



2. The second thing in the book is that Graham gives you a marvelous set point in terms of how the investor should react to
stock market fluctuations. He talks about his mythical Mr. Market in chapter 8. There’s been no better thing written in
terms of the investors attitude toward stock prices. … The beautiful thing about him [Mr. Market] is that this guy is
[not an instructor but] an alcoholic manic-depressive. …

And that is what Graham tells you. The market is there not to instruct you, to tell you anything. The market is there
basically just to serve you when you want it to serve you. …

You have to value the business and … it is amazing but people don’t do that on Wall street. You hear price targets or
that kind of thing. But you have seen no one write a paper that says here is the nature of this business over the next 20 years.
You know, what will, what should that business sell for? Forget about what it is selling for.


3. Third thing in Graham’s book is the margin of safety. … You always leave a margin of safety.