The Intelligent Investor_ The Definitive Book on Value Investing - Benjamin Graham [213]
Ironically enough, the aggregate of profits accruing from this single investment decision far exceeded the sum of all the others realized through 20 years of wide-ranging operations in the partners’ specialized fields, involving much investigation, endless pondering, and countless individual decisions.
Are there morals to this story of value to the intelligent investor? An obvious one is that there are several different ways to make and keep money in Wall Street. Another, not so obvious, is that one lucky break, or one supremely shrewd decision—can we tell them apart?—may count for more than a lifetime of journeyman efforts.1 But behind the luck, or the crucial decision, there must usually exist a background of preparation and disciplined capacity. One needs to be sufficiently established and recognized so that these opportunities will knock at his particular door. One must have the means, the judgment, and the courage to take advantage of them.
Of course, we cannot promise a like spectacular experience to all intelligent investors who remain both prudent and alert through the years. We are not going to end with J. J. Raskob’s slogan that we made fun of at the beginning: “Everybody can be rich.” But interesting possibilities abound on the financial scene, and the intelligent and enterprising investor should be able to find both enjoyment and profit in this three-ring circus. Excitement is guaranteed.
Commentary on Postscript
Successful investing is about managing risk, not avoiding it. At first glance, when you realize that Graham put 25% of his fund into a single stock, you might think he was gambling rashly with his investors’ money. But then, when you discover that Graham had painstakingly established that he could liquidate GEICO for at least what he paid for it, it becomes clear that Graham was taking very little financial risk. But he needed enormous courage to take the psychological risk of such a big bet on so unknown a stock.1
And today’s headlines are full of fearful facts and unresolved risks: the death of the 1990s bull market, sluggish economic growth, corporate fraud, the specters of terrorism and war. “Investors don’t like uncertainty,” a market strategist is intoning right now on financial TV or in today’s newspaper. But investors have never liked uncertainty—and yet it is the most fundamental and enduring condition of the investing world. It always has been, and it always will be. At heart, “uncertainty” and “investing” are synonyms. In the real world, no one has ever been given the ability to see that any particular time is the best time to buy stocks. Without a saving faith in the future, no one would ever invest at all. To be an investor, you must be a believer in a better tomorrow.
The most literate of investors, Graham loved the story of Ulysses, told through the poetry of Homer, Alfred Tennyson, and Dante. Late in his life, Graham relished the scene in Dante’s Inferno when Ulysses describes inspiring his crew to sail westward into the unknown waters beyond the gates of Hercules:
“O brothers,” I said, “who after a hundred thousand
perils have reached the west,
in this little waking vigil
that still remains to our senses,
let us not choose to avoid the experience
of the unpeopled world that lies behind the sun.
Consider the seeds from which you sprang:
You were made not to live like beasts,
but to seek virtue and understanding.”
With this little oration I made my shipmates
so eager for the voyage
that it would have hurt to hold them back.
And we swung our stern toward the morning
and turned our oars into wings for the wild flight.2
Investing, too, is an adventure; the financial future is always an uncharted world. With Graham as your guide, your lifelong investing voyage should be as safe and confident as it is adventurous.
Appendixes