His wisdom lives on

SINGAPORE (Feb 26): Warren Buffett and Walter Schloss are known for their extraordinary skills in investing. But for every student, there is a master. Who is this master? He is none other than Benjamin Graham, also known as the “father of value investing”. Born in 1894, Graham started his investment journey at the age of 20 after graduating from Columbia University. He is known for authoring The Intelligent Investor (1949) and Security Analysis (1934). The principles and philosophy encapsulated in the book have stood the test of time. But, is his wisdom and principle still relevant today?

Graham once said, “There are two requirements for success in Wall Street. One, you have to think correctly and, second, you have to think independently”. As humans, we are susceptible to what scientists call “herding”. Evolution has favoured herding because it has ensured that humans thrive and survive. In the investment world, however, herding can be a very dangerous thing. Herding has led to many prominent bubbles such as Tulip Mania, the dotcom bubble and the 2007 uranium bubble.

Independent thinking, when coupled with the right information, can help you avoid succumbing to Mr Market’s unpredictable mood.

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