Finance

Life and history of Benjamin Graham: the man who inspired Warren Buffett

Every person has a role model. For Warren Buffett and many others, this man was Benjamin Graham. Take a look at this legendary investor

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Benjamin Graham was one of the most important investors of the 20th century. He inspired people like Warren Buffett and helped to shape the modern world of investing.

Graham was a value investor, which means he looked for stocks that were undervalued by the market. He believed that by buying these stocks, he could make a profit in the long run.

Graham also wrote several books on investing, which are still popular today.

In this article, we are going to be taking a deep look into one of the most important financial gurus even today. His life and what is value investing more deeply.

Life and History of Warren Buffett

Since childhood, this man already performed miracles with money. Check out the story of one of the most legendary businessmen in history.

Early life

Benjamin Graham was born on May 9th, 1894 in England. His first name was actually Benjamin Grossbaum.

When his family moved to the United States, they decided to change his surname from “Grossbaum” to “Graham”. This way, they were better able to assimilate into American life and avoid the anti-semitic and anti-germanic sentiments that were prevalent at the time.

Benjamin’s parents felt that this was the best way to ensure that his family could live a peaceful and prosperous life in their new home.

After his father, who ran a profitable furniture store, passed away, the family went through a period of adversity, which, according to Graham, ultimately shaped his investing views by spurring an early appreciation of buying low-priced bargains.

Consequently, Graham and his siblings were often forced to go without basic necessities like food and clothing.

This experience made a lasting impression on Graham and helped to shape his later thinking on investing. He learned that it was possible to find bargains among stocks that were trading at low prices and that by investing in these companies, it was possible to make a lot of money.

Graduation, and the beginning in Wall Street

Sometime later, Graham graduated from Columbia, regarded as a great student.

He turned down the chance to teach philosophy, math, and English in favor of a job on Wall Street.

 It was there that he eventually started his Graham-Newman Partnership. The Partnership was a huge success and made him a very wealthy man.

One of the most famous cases known was the Northline Pipeline Co., a case involving none other than John Rockefeller, one of the wealthiest persons in human history.

Graham bought enough shares to compel a proxy vote to divide the large cash and bond holdings Northern Pipeline Co. had, which he believed were not being used effectively, based on his study.

After that, many people regard Graham as a fantastic investor and decided to take a look at some of his ideas and investment philosophies. That is the birth of Value Investing, the beginning of what we know now.

What is value investing?

Choosing stocks that appear to be trading for less than their intrinsic or book worth is part of the value investing technique.

Value investors hunt down stocks that they believe the stock market is undervaluing. They contend that the market overreacts to both positive and negative news, causing stock price fluctuations that are inconsistent with a company’s long-term fundamentals.

The overreaction presents a chance to make money by purchasing equities at a discount—on sale.

Many value investors exhibit a contrarian inclination, which means they frequently act in opposition to what the market as a whole is doing.

They frequently exercise patience and keep an eye out for chances that others might have missed. Value investors often conduct extensive research on a company before investing.

Like many people, at first, you might be kind of skeptical about this kind of investment. Why would do exactly the opposite of what many people are doing?

The first thing you may notice is that this kind of investment goes completely against the herd effect.

This effect is characterized when we as people do something only because other people are doing it too, without any kind of critical thinking.

Not thinking for yourself is a severe flaw when you want to become an investor.

However, if you think that perhaps no one could become rich with this kind of strategy, you may think again.

Warren Buffett, one of the richest people on earth, already stated that apart from his father, Benjamin Graham was the most influential man in his life.

Conclusion

If one of your pupils is one of the most successful persons in the world, this adds up a lor of credibility for yourself. “The Intelligent Investor”, considered by many Graham’s Magnus Opusis still read and bought across the world.

Benjamin Graham may have died almost 50 years ago, but hs legacy does not seem to slow down at all

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