Ben Graham: The Legacy Of A Value Investor Lives On

Ben Graham: The Legacy Of A Value Investor Lives On
CC Investment Masters Class - with permission

Ben Graham: The Legacy Of A Value Investor Lives On

Benjamin Graham is rarely in the news. The reason is likely due to the fact that Graham passed away 35 years ago. However, Graham is now making headlines as Columbia University announced the creation of a short documentary on the father of value investing, which includes the first known live coverage of Warren Buffett’s mentor.

The documentary is called ‘Legacy of Benjamin Graham.’

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We note the highlights of the video below:

Student memories:

The video starts out with a live lecture of Ben Graham at Columbia University. Graham repeats some of his famous quotes during the short segment. The film also ends with live footage of Graham answering a student’s questions. The Q & A goes as follows, “Our studies indicate that you have your choice between tossing coins and taking the consensus of expert opinion and the results are just about the same in each case. Your question as to why they are not more dependable is a very good one and a very interesting one. My own explanation for that is this: everyone on Wall St. is so smart that their brilliance offsets each other. and that whatever they know is already reflected in the level of a stock price pretty much, and consequently whatever happens in the future represents what they don’t know.” H/T Elliot Turner

Warren Buffett talks about Graham as a teacher. He compares learning under Graham to being taught baseball by someone who bats 400.

Buffett says that Graham changed his life. Buffett knew right away that Graham’s words made sense. Buffett called Graham a widely diversified, passive investor. He was not driven towards maximizing returns. Graham looked for mediocre businesses which were very cheap. He notes the Graham never got excited about a deal, but never threw cold water on it.

Graham felt that his books were geared towards people who could not talk to management, and therefore felt that students talking to management were in a way ‘cheating.’

Graham was not motivated by making money. Graham told Buffett that making money won’t change the way you live, it will change the way your wife lives!

Buffett talks about Graham coming over to visit, and that Graham would give gifts to others on his birthday.

Graham’s teaching was likely an act of kindness and expected nothing in return from his students.

A former student says that Graham told him, to make money you need to have the proper philosophy, as Spinoza captured. He notes the Graham was very warm and understanding.  He calls the stance of Graham very powerful and helped him later in life as a philosopher. Having patience and focusing on fundamentals can be applied outside investment. In terms of investing, the former student states that everyone who followed Graham had one thing in common, they never lost money.

Edwin Schloss, the son of famous value investor, Walter Schloss, and a great investor himself, says that  Ben Graham could not get out of the classroom. Schloss says that students would rush to him after class to  ask him advice, not necessarily on a specific stock, but rather ask for general investment advice.

Schloss states that he used many of his famous quotes during class.

Schloss notes that he once demonstrated how company A was cheaper than company B, until he showed the class an hour later that they were the same company!

Schloss also notes Graham’s generosity. He says  Graham would go out to lunch with people and recommend stocks to him. Schloss’ father would get upset because sometimes a different student would have already bid up a stock only a few minutes later.

Graham knew he was out of the time and probably did not realize at the time what impact he was having on the world of finance.

Another student talks about Graham’s ability to make ideas and concepts sound so simple by only using ‘four letter words.’ He says that Graham was extremely fast and likely wore a white jacket to absorb Chalk.

The famous investor Irving Khan comments that Graham was a very popular professor as he would talk about things that happened that day not a year ago to try to draw reader interest. Khan says that Graham placed a large emphasis on cash.

Someone else opines that Graham likely asked questions which he knew the answer to using the Socratic technique.

Another student notes Graham’s amazing memory even with non-financial topics. Graham believed that you could be an activist and benefit shareholders and society as a whole.

The full video can be found below:

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