Benjamin Graham

Their life

The father of value investing. After watching his widowed mother's margin account get wiped out in the Panic of 1907, he spent a career building investing into a discipline: Security Analysis (1934) and The Intelligent Investor (1949) taught margin of safety, the difference between price and value, and the parable of Mr. Market. Warren Buffett, his student, called him the second most influential person in his life after his father.

Known for

• Security Analysis (1934)
• The Intelligent Investor (1949)
• Margin of safety principle
• The Mr. Market parable
• Graham-Newman Corporation
• Mentoring Warren Buffett

The road they walked

Benjamin Graham was born Benjamin Grossbaum in London in 1894, the youngest of three sons in a family that emigrated to New York when he was an infant. His father ran a small china and porcelain import business that supported a comfortable childhood, but the father died when Graham was nine, and the business collapsed soon after, leaving his mother to take in boarders and speculate on margin to keep the family afloat — a gamble that failed catastrophically in the Panic of 1907. Graham was nonetheless a prodigy in the classroom, entering Columbia on scholarship and graduating in 1914 second in his class, fluent in Greek and Latin and gifted enough in philosophy, mathematics, and English literature that Columbia offered him teaching posts in all three departments. He turned them down for a job on Wall Street, where he believed the money — and the intellectual puzzle of markets — waited.

He started as a messenger and bond salesman at Newburger, Henderson & Loeb, but his talent for reading balance sheets and dissecting corporate reports quickly moved him into analysis and then partnership. By 1926 he was running his own investment account, applying a discipline almost nobody else on the Street practiced: buying businesses, not tickers, for less than their demonstrable worth. The 1929 crash humbled him badly, wiping out most of his gains and taking years of careful rebuilding to recover, but it also sharpened his conviction that speculation and investing were fundamentally different acts. To work out his ideas rigorously he began teaching a night course at Columbia Business School in 1928, and there he partnered with a young colleague, David Dodd, to turn his lecture notes into 1934's Security Analysis — a nine-hundred-page manual that gave Wall Street its first systematic method for separating sound businesses from speculative froth.

Through his investment firm, Graham-Newman Corporation, he put his own theories to the test, most famously in a long, rule-bending stake in a small auto insurer called GEICO that eventually returned more than the rest of the firm's portfolio combined. He kept teaching at Columbia for decades, and his classroom became a pipeline for a generation of disciplined investors, including a young Warren Buffett, whom Graham later hired at his firm. In 1949 he distilled his philosophy for a general audience in The Intelligent Investor, softening the technical machinery of Security Analysis into plain instruction on temperament, patience, and the gap between a stock's price and a business's value. He retired from active management in 1956, but kept revising his books and corresponding with the investors he'd trained, whose successes carried his ideas long after he'd left the trading floor himself.

How their story ended

Graham died on September 21, 1976, in Aix-en-Provence, France, at age 82, having spent his last years dividing his time between California and the south of France. Accounts describe his death as coming quietly, from age-related natural causes, though some sources point specifically to a heart attack; either way, there is no real dispute about the gentle, unremarkable circumstances of his passing. He had continued revising his work and corresponding with former students almost to the end, closing out a life that had turned the chaos of the market into a teachable discipline.

In their words

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From the Journal