Warren Buffett is today the most successful investor in the world. His interests in the stock market were ignited at a very early age. At the age of 7 years, he had already started looking for materials to read in his father’s shop. At the age of 11, he was going to the public library in his hometown to look for books on investments.
Generally, Warren Buffett spent most of his young life-consuming information on prudent investment. However, of all the books he has led, there is one which made the biggest impact in his life. “The Intelligent Investor” is a book written by Benjamin Graham, an investor and a professor at the University of Columbia. The book was published in 1949.
The book is a guide to value investing. Since he read this book, Warren Buffett developed a unique way of understanding the market. Value investing is a philosophy of investing which teaches investors how to invest in undervalued stocks. This strategy cushions the investor from any aggressive movement of the stock. The book influenced Warren Buffett to an extent it felt like he had met a god. In 1951, Buffett moved to the University of Columbia, where he would be taught by Benjamin Graham. Warren Buffett says that there are three important principles which he learned from Graham.
One, a stock is only worth the value of the company. When an investor is buying a stock, they should be aware whatever they own is a part of the company. So, if the firm is to record any success, they will benefit directly and if it makes losses they lose together. So, when making an investment, the long-term performance of the company should be a subject of discussion.
Another lesson he learned is about buying a stock when the market price is below its intrinsic value. Finally, Graham taught Warren to treat the market as a business partner offering opportunities to buy stocks at various prices. One must look for the best prices to make purchases.