The Intelligent Investor (Benjamin Graham, 1949)

• Benjamin Graham's core principle
1. Stock is an ownership of the actual business.
2. The market is either too expensive or it overbalanced to too cheap.
3. The higher the price you pay, the lower your return it will be.
4. The risk of being wrong can never be eliminated.
5. You can even take advantage on bear market.
• Successful investment come from identifying the likeliness for the industry to grow.
1. Obvious physical growth does not always translate to investor's profit.
2. Experts have no dependable ways to select the most promising companies in the most promising industry.
• Mindset: patient, disciplined, eager to learn and hardness emotions.
• The defensive investor must confine himself to the shares of important companies with a long record of profitable operations and in strong financial condition.
• The longer the bull market the more investors may thought a bear will never come.
• Price fluctuations of convertible bonds and preferred stocks
1. Variations in the price of the related common stock.
2. Variations in the credit standing of the company.
3. Variations in general interest rates.
• Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.
• Humans are pattern-seeking animals.
• Our brains are designed to perceive trends even where they might not exist.
• Red flags
• “offshore”
• “the opportunity of a lifetime” 
• “prime bank” 
• “This baby’s gonna move.” 
• “guaranteed” 
• “You need to hurry.” 
• “It’s a sure thing.” 
• “our proprietary computer model” “
• The smart money is buying it.” 
• “options strategy” 
• “It’s a no-brainer.” 
• “You can’t afford not to own it.” 
• “We can beat the market.” 
• “You’ll be sorry if you don’t . . .”
• “exclusive”
• “You should focus on performance, not fees.” 
• “Don’t you want to be rich?” 
• “can’t lose” 
• “The upside is huge.” 
• “There’s no downside.” 
• “I’m putting my mother in it.” 
• “Trust me.” 
• “commodities trading” 
• “monthly returns” 
• “active asset-allocation strategy” 
• “We can cap your downside.” 
• “No one else knows how to do this.”
• Stocks selection
1. Adequate size of the enterprise.
2. Sufficient strong financial condition.
3. Earning stability.
4. Divident record.
5. Earning growth.
6. Moderate price/earning ratio.
7. Moderate ratio of price to assets.