´´ On The Beauty of Value Investing

Friday, January 6, 2017

On The Beauty of Value Investing

When I first encountered the Intelligent Investor by Benjamin Graham it was like a revelation. After finishing the book I was in the same emotional state like when I first saw Michelangelo’s frescos in the Sistine chapel. The strong feeling was even intensified when I read Security Analysis by Graham and Dodd.



The beauty of Michelangelo’s work will be clear to most of the readers of this post. But how can books about investing, for most indeed an extremely boring and dull matter, be described as beautiful.

The beauty of the concept to investing outlined by Graham and Dodd is twofold. Firstly, it is to be found in the basic premise that you invest in a business and not in a piece of paper. The corollary of the statement is that the act of investing should be seen as running a business. A much more comforting position to find oneself in than seeing an investment in a stock just as a ticker symbol. The investor who sees investing as a business venture is able to develop an entrepreneurial spirit. Those investors who are able to develop that spirit will have a huge advantage over their competitors. Mainly because of the well-defined purpose, desire and passion, imagination, persistence, believes, seeking of knowledge and many other powerful values the entrepreneurial spirit entails.

The second beauty aspect of the value investing concept outlined by Graham and Dodd is its simplicity.  No rocket science involved but rather plain- vanilla arithmetic. Adding, subtracting, multiplying and dividing. And no dear readers, making a DCF analysis is not beautiful! DCF analysis is free jazz. Nice to look at, but you just do not want to listen to it.

Those investors who combine the aforementioned entrepreneurial spirit with the simple framework to value investing outlined by Graham and Dodd will be highly successful on the long- run. Not only in the field of investing, but rather in many other aspects of life too.

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