LEARN FROM GENERALS OF THE MARKETS – PART 9
Benjamin Graham lived from May 8, 1894 until September 21,
1976. He was born in the UK but was taken to the US when he was yet a kid. He
graduated from Columbia University when he was twenty years old. Then he became
an instructor. He’s considered the first person to espouse and teach value
investment and investment discipline. He was able to influence great followers
(who’re successful traders; giants of the markets), including Warren Buffett,
William J. Ruane, Irving Kahn, Walter J. Schloss, Chris Johnston, etc.
Benjamin’s investment principles have stood the test of the
time, and are therefore peerless. His principles and ideas are mentioned in his
books titled: Security Analysis (published in1934) and The Intelligent Investor
(published in 1949). The books are very popular in the world of investment. Benjamin
himself said: “Investment is most intelligent when it is most businesslike. It
is amazing to see how many capable businessmen try to operate on Wall Street
with complete disregard of all the sound principles through which they have
gained success in their own undertakings. Yet every corporate security may best
be viewed, in the first instance, as an ownership interest in, or a claim
against, a specific business enterprise. And if a person sets out to make
profits from security purchases and sales, he is embarking on a business
venture of his own, which must be run in accordance with accepted business
principles if it is to have a chance of success.”
Lessons
Some good lessons can be learned from Benjamin. Some of them
are mentioned below (in very simple terms):
1.
You can benefit greatly from trading teachers. Benjamin
is presumed to be the first effective investment lecturer. This fact is evident
in his followers, like the Oracle of Omaha (Warren), who’s been a long-term
success on the battlefield of the markets. There are many great investment teachers
like Benjamin today. How can you learn their timeless and non-market specific principles
and make yourself one of the best traders in your generation?
2.
The hypothetical theory of the Efficient Market is
bunkum. The Efficient Market theory says that that it is generally impossible
for any individual to consistently outwit the market. I don’t know why someone would take this
theory serious when reality shows otherwise. That fact that someone fails in
the markets doesn’t mean that everybody fails. If you don’t know those who can
constantly beat the markets; no matter how small their profits are, I‘ll tell
you that they exist. Those who spread that theory are probably those who’ve not
found the secrets of everlasting success in the markets. Nearly all the
generals of the markets that are featured in this series have found the
secrets. Trading is definitely not easy,
but everlasting success is possible. Once you start enjoying this, you’ll be
hooked.
3.
Some of Benjamin’s cardinal investment topics are: You
should always invest with a margin of safety, expect volatility and movements
from the markets and gain from them, and you should know the kind of investor
you are.
4.
You’ve to master yourself before you can master the
markets. According to Benjamin, individuals who cannot master their emotions
are ill-suited to profit from the investment process.
Conclusion: We
may be expecting too much from the markets; the exact opposite of having
realistic expectations. Would wouldn’t
agree that in most cases we’re our own worst enemy? Without minimizing the
great harm losses can do to our portfolios, and to our emotional well-being,
who can deny the damage we cause as we apply poor position sizing and risk
management rules. However, if we can control ourselves logically, we can garner
great riches inherent in the markets.
This article is ended with a quote from Benjamin:
“Have the courage of your knowledge and experience. If
you have formed a conclusion from the facts and if you know your judgment is
sound, act on it - even though others may hesitate or differ. You are neither
right nor wrong because the crowd disagrees with you. You are right because
your data and reasoning are right.”
Azeez Mustapha
Market Analyst, Trading Signals Provider and Coach
NB: If you want
to receive permanently free winning Forex trading signals, please send me an
email titled: “A Request for Free Trading Signals.”
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