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The Intelligent Investor : 5 Golden Rules to Beat the Market

Benjamin  Graham is known as the father of investing methodology. Even Warren Buffett has said he learned investing rules from Benjamin  Graham. In childhood, Warren Buffett read “The Intelligent Investor”  and gave credit to Benjamin  Graham for his success. So here are the 5 lessons every investor have to learn from Benjamin  Graham.

Investing vs Speculation

Benjamin Graham has said that firstly people should have to understand the difference between investing and speculation. If you go through an overall analysis of the company and after that, if your principal amount remains fixed and you earn adequate return yearly, then it is called investing, otherwise, you are speculating with your own money.

Value vs Market

When you want to invest your money to any company shares, then always see the value of the company, not the market. Because sometimes you are unable to decide to buy or sell your share of a company because of fluctuations in the market. Suppose you think the market as individual and if he says on one day buy this share and another day he comes and says sell it. Do you listen to words of that unstable individual? Your answer will be clearly no.  You will neglect that person. So you should always see the value of the company and how their management is working to maximize profit.

Market Value vs Intrinsic Value

When you take a decision to buy stock shares then always choose those company whose Market value is less than Intrinsic value. Intrinsic value depends upon the company brand, goodwill assets, and future plan, whereas market value depends upon the market.

Defensive vs Enterprising Investor

There are two types of investor one is Defensive investors and other is Enterprising Investors. The Defensive Investor always think to avoid loss, has a less risk-taking ability and these type of investors play safely in the market. They don’t give much time on researching the company background and has less confident.  Enterprising investors are those investors who believe on himself and they are willing to take the risk and give more time to research.

One Basket Rule

This rule is must for every investor to follow for the adequate return. It helps to manage your principal amount from loss. So always don’t put all your money in one basket, spread it on various company stocks. (Basket).