Graham Benjamin is a British economist and American investor. He created the current methodology for analyzing securities and paved the way for a new era of strategic economic planning, which was developed and supplemented by his students and followers: Warren Buffet, John Neff, Mario Gabelli, John Bogle Michael Price and many others.
The books that Benjamin Graham wrote - “The Smart Investor” and “Securities Analysis” - are considered inexhaustible sources of valuable information for financial and economic experts, strategists and enthusiasts. They helped a huge number of popularizers of economic theories to write a large number of such literature. To this day, Ben's ideas and his economic approaches are strictly followed and jealously guarded. According to Warren Buffett, Graham Benjamin was a genius who became a father to him and many other students. He transferred his great knowledge and outstanding abilities, which allowed them to remain innovators and pioneers after him.
early years
Graham Benjamin (photo below in the article) was born on May 8, 1894 in London (England), in a Jewish family, was the youngest of three children. My father was importing porcelain from Austria and Germany. He changed his surname Grossbaum because of the anti-German sentiments that existed in Great Britain after the First World War. When Ben was only 1 year old, the family moved to New York to open an American branch. Graham succeeded in learning only after the death of his father. Benjamin and his family were in need, which forced him to become a good student.
Education
In 1914, Graham Benjamin graduated from Columbia University with the title Salutator - the second best graduate of the entire course, which is awarded in the United States. Then he was 20 years old. Three faculties immediately invited Ben to become a teacher of English, mathematics and philosophy, but he refused to be on Wall Street. Graham got a job at Newburger, Henderson & Loeb as an assistant in a $ 12 a week bond department and eventually established a successful Graham-Newman partnership.
Career
From 1919 to 1929, Benjamin Graham the investor moved on Wall Street quickly and spectacularly. Having become a partner of Newburger in 1920, he retained his salary and received 2.5% of income without liability for losses.
Ben's friends were so impressed with his approach to investing that in 1923 they offered him $ 250,000. So there was the Grahar Corporation, which existed until the end of 1925. Its first operation was the purchase of DuPont shares and a seven-fold short position in General Motors, which brought great profit.
Joint account
On January 1, 1926, the “Benjamin Graham Joint Account” was launched. By 1929, the initial capital of $ 450 thousand increased to $ 2.5 million.
One of the successful acquisitions was the purchase of securities by the North Pipeline pipeline company, which, he discovered, had invested heavily in railway bonds, the value of which significantly exceeded its income. Ben bought 2,000 shares at a price of about $ 65, and then pushed management to redistribute capital among shareholders, insisting that there was no need to account for bonds in the company’s accounts for an amount 10 times their income. In the end, management twice made a distribution of capital in the amount of $ 50 and $ 20 per share, and Ben received more money than he invested, while maintaining his stake in the company.
The affairs of the fund were so successful that it was drew the attention of a well-known sugar speculator and financier Bernard Baruch. He invited Ben to his partners, but he refused.
At the end of 1926, Jerome Newman joined the foundation, a partnership with which continued for the next 30 years, until Ben retired in 1956.
Broadway
Benjamin's love of reading world classics, often in the original, led him to write the play. In 1934, Baby Pompadour was staged on Broadway. The New York Times critic commented on it, saying that if one of Mr. Graham's students at Columbia University wrote an essay on analyzing securities in the same banal and distracted manner as this play about a famous journalist whose professional career influenced by a chorus girl-lover, he would undoubtedly have received the lowest rating.
The play withstood only 4 performances, and the second attempt to conquer Broadway also ended in failure.
Books
Graham wrote his first book, Securities Analysis, co-authored with David Dodd, which was published in 1934. It refers to the qualities of an investor who can evaluate a company based on all its financial statements and make the right acquisitions to get a satisfactory return without risk losses. This book has become the "bible" of serious investors. Warren Buffett, a well-known American multibillionaire, was a pupil and great follower of Graham and Dodd. Buffett made up most of his fortune by methodically and rationally translating the postulates of Analysis.
In 1949, Ben published The Intelligent Investor, which was as innovative as the previous one. The book describes an approach known as value investment. Graham Benjamin began teaching (most of his ideas later published) this method at the School of Economics and Trade at Columbia University in 1928, and the ideas and theories of value investments were subsequently ennobled with the help of David Dodd.
Both work equally shocked the financial world. According to Warren Buffett, book, written by Benjamin Graham (Graham), The Intelligent Investor, is "the best investment ever written." In it, the author's ingenious inspiration appeals to a participant in the securities market, who is able to distinguish between investment and speculation. Graham clearly showed the world what it is and how they differ. More precisely, he changed the scenario of the stock market and revolutionized the receipt of income from investing capital. In “Analysis of Securities”, he wrote that investment is what, after careful consideration, promises the safety of the main investment and adequate profitability. Transactions that do not meet these requirements are speculative.
Gift of foresight
So that people could understand the risks and learn how to invest money, Graham Benjamin brilliantly used the imaginary Mr. Market, who was involved in buying and selling shares. He wanted investors to handle their investments professionally and in business. This approach allows for a more reasonable investment.
Throughout his career, Graham was very critical of the often changing and irregular reporting by companies and enterprises, which made it difficult for current and potential investors to determine the true nature of the financial situation of the business. Ben was a supporter and strongly supported the payment of dividends. He opposed having companies keep all profits undistributed. Graham loudly criticized those financial advisors who urged people to buy stocks at any price simply because of the good prospects for a steady rise in their prices. He stated that financial management should be based on a good analysis of the actual state of the business.All these ideas were voiced at a time when there was nobody who could teach the world how to invest money and keep finances. They are used in today's investment platforms and determine the modern point of view on the stock market. This was the genius of this man, thanks to whom financial income, stocks and investment planning began to be viewed from a wide angle and with eagle vigilance.
Benjamin Graham: Interesting Facts
In his early years, Ben was an avid skier and tennis player. But he found real pleasure, exercising his mind with hobbies far from the world of finance. He loved music, especially operas - for the wisdom of their lyrics and melody. In addition, during his leisure time, he was engaged in planimetry and patented several versions of a simplified protractor and a circular slide rule.
With so many interests, it becomes clear why Ben, being a faithful father, was actually more married to his business and cultural interests than he was a normal husband.
Graham was involved in charity work and was president of the Jewish Blind Guild. He helped numerous refugees from Nazi Germany with advice, guidance, and money so that they could start a new life in the United States. Many of these people later became faculty members at major American universities.
Graham died on September 21, 1976 in his home in Aix-en-Provence (France) at the age of 82.
