Benjamin Graham

Benjamin Graham (born Benjamin Grossbaum; May 9, 1894 – September 21, 1976) was a British-born American economist and professional investor. Graham is considered the father of value investing, an investment approach he began teaching at Columbia Business School in 1928 and subsequently refined with David Dodd through various editions of their famous book Security Analysis.

Graham had many disciples in his lifetime, a number of whom went on to become successful investors themselves. Graham's most well-known disciples include Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss, among others.

Early Life

Mr. Graham moved to New York City with his family when he was one year old. After the death of his father and experiencing poverty, he became a good student, graduating from Columbia University, as salutatorian of his class, at the age of 20. He received an invitation for employment as an instructor in English, mathematics, and philosophy, but took a job on Wall Street eventually starting the Graham-Newman Partnership.


Benjamin Graham first went to Wall Street in 1914, two months before World War 1 broke out, as a chalker on Wall Street with Newburger, Henderson and Loeb. As a special favor, he was paid $12 a week instead of $10 to begin. Then when the war broke out, the stock exchange closed, and Graham’s salary was reduced back to $10. Still, Graham continued to work for the firm and his hard work paid off when he was promoted to partner during 1920.

According to several sources around 12 years later, during 1926, Graham formed his investment partnership with Jerome Newman and started perfecting his deep-value investment strategy.

From 1914 to 1929 Graham experience 15 years of continuous success but the crash of 1929 floored Graham. It is claimed that he was personally wiped out as, like many investors at the time, he had an enormous pile of margin debt.

The crash of 1929 helped Graham develop his deep value strategy. Losing everything pushed Graham only to take positions in securities where the risk of permanent capital loss was low. And by concentrating on deep value situations, the Graham--Newman Partnership had recovered its losses from 1929 by 1937, just in time to ride out yet another period of market turbulence.

The Graham--Newman Partnership closed in 1936 to be replaced by the Graham-Newman Corporation. The Graham--Newman Corporation was run as a sort of mutual fund. Shares were issued at $99, and the company reported earnings per share for the year, alongside a net asset value and dividends. Most of the company’s profits were returned to shareholders via dividends.

By 1958, the year of liquidation, a total distribution of $840.62 per share had been made to investors as Graham--Newman’s enterprise wound down -- that’s a total return of 750% over 30 years, excluding distributions made. Including distributions the Partnership boasted an average annual return of 17%.

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Secutiy Analysis

His first book, Security Analysis, with David Dodd, was published in 1934. Security Analysis and The Intelligent Investor, published in 1949 (4th revision, with Jason Zweig, 2003), are his two most widely acclaimed books. Warren Buffett describes The Intelligent Investor as "the best book about investing ever written." Graham exhorted the stock market participant to first draw a fundamental distinction between investment and speculation. In Security Analysis, he proposed a clear definition of investment that was distinguished from what he deemed speculation. It read, "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

“The intelligent investor is a realist who sells to optimists and buys from pessimists.”