Benjamin Graham

# Benjamin Graham **Benjamin Graham** (1894-1976) was Warren Buffett's teacher, mentor, and the intellectual father of value investing. Buffett called Graham "the second most influential person in my life, after my father." Graham's principles—intrinsic value, margin of safety, and Mr. Market—remain the foundation of Buffett's approach to this day. ## Life and Career Graham was born in London and immigrated to New York as a child. He began his Wall Street career as a messenger at a brokerage firm, eventually becoming one of the most respected security analysts of his generation. He taught at Columbia Business School, where he famously tutored Buffett as a young student. Buffett reportedly enrolled in every class Graham taught. ## The Key Works Graham's two books defined modern value investing: **"Security Analysis"** (1934, with David Dodd): Written during the Great Depression, this book introduced rigorous analytical methods to security analysis. It taught investors to treat stocks as ownership stakes in businesses, not as speculative instruments. **"The Intelligent Investor"** (1949): The accessible version of Graham's philosophy, written for individual investors rather than professionals. Buffett has called it "the best book on investing ever written." ## The Core Principles Graham's investment framework rested on several pillars: ### Intrinsic Value Every business has a true underlying value based on its fundamentals—earnings, dividends, assets, and growth prospects. The stock market quotes prices that fluctuate around this intrinsic value, often dramatically. ### Margin of Safety Never pay full price for a security. Always insist on a significant discount between the market price and conservative estimate of intrinsic value. This margin provides protection against errors and bad luck. ### Mr. Market The stock market is like a moody business partner who appears daily offering to buy or sell at varying prices. Take advantage of his moods—when he is depressed, buy; when he is euphoric, sell. ## Graham and Buffett Graham's influence on Buffett was profound and lasting. Buffett adopted Graham's framework and practiced it faithfully for years, making substantial fortunes by finding cigar butt investments—cheap stocks of mediocre businesses. It was [[Charlie Munger]] who encouraged Buffett to evolve beyond Graham's approach, arguing that paying a fair price for an excellent business was superior to paying a bargain price for a mediocre one. Buffett embraced this insight, but always credited Graham with the foundational framework. ## The Legacy Benjamin Graham's ideas have influenced not just Buffett but generations of investors. His emphasis on analysis, discipline, and rationality transformed investing from speculation into a serious intellectual discipline. He also founded the Graham & Dodd approach to security analysis, which remains the intellectual foundation of value investing worldwide.