Most powerful mental model from Benjamin Graham [CHART]

1. Benjamin Graham – once known as The Dean of Wall Street – was a scholar and financial analyst who mentored legendary investors such as Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss.

   Warren Buffett once wrote a detailed article explaining how Graham’s record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham’s principles are everlasting. The article is called “The Superinvestors of Graham-and-Doddsville”.

   Buffett describes Graham’s book – The Intelligent Investor – as “by far the best book about investing ever written” (in its preface).

   Graham’s first recommended strategy – for casual investors – was to invest in Index stocks.
   For more serious investors, Graham recommended three different categories of stocks – Defensive, Enterprising and NCAV – and 17 qualitative and quantitative rules for identifying them.
   For advanced investors, Graham described various “special situations”.

   The first requires almost no analysis, and is easily accomplished today with a good S&P500 Index fund.
   The last requires more than the average level of experience, intuition and talent. Such stocks are not amenable to impartial algorithmic analysis, and require a case-specific approach.

   But Defensive, Enterprising and NCAV stocks can be reliably detected by today’s data-mining software, and offer a great avenue for accurate automated analysis and profitable investment.

   Thank you.

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