THE INTELLIGENT INVESTOR
Authored by BENJAMIN GRAHAM
"By far the best book on investing ever written" - Warren Buffet

A Sound Intellectual Framework
Emotional Discipline
1.
2.
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“
To Invest successfully over a lifetime does not require a
stratospheric IQ, unusual Business insights, or insider
Information. What's needed is:
Provided by the
Book
We have to Supply
- Warren Buffet in Preface
“

1. INVESTMENT VS SPECULATION
An Investment operation is one that, upon
thorough analysis, promises the safety of the
principal and an adequate return.
Operations Not Meeting these requirements are
Speculative.
Results to be expected by the intelligent investor
depend on their approach to investing.
Importance of Conducting thorough research and
analysis before making investment decisions
rather than blindly following market trends.
2

Total Number of Individual traders participation in equity F&O Segment 3
FY 19 FY22
50,00,000
40,00,000
30,00,000
20,00,000
10,00,000
0
Sebi study of traders
in the Equity F&O
Segment.

Defensive
The Defensive investor is
someone who is primarily
concerned with preserving
capital and avoiding losses.
Stability > Growth
Aggressive
The Aggressive investor is someone
who is willing to take on more risk in
order to potentially earn higher
returns.
Comfortable with Volatility
DEFENSIVE VS AGGRESSIVE INVESTORS
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2. INVESTOR AND INFLATION
What is Inflation?
The Money Illusion.
2 % Raise and 4 % Inflation
2 % Cut and 0 % Inflation
How to Protect against Infaltion?
Stocks that have history of increasing dividend
High Quality Bonds that protect against
Inflation.
Diversifying across range of asset classes.
5

INFLATION!
The author emphasizes the
importance of understanding
the impact of Inflation on
investment decisions and
taking proactive steps to
protect against its effects.
6

Author emphasises on Long Term Perspective
What is P/E Ratio?
General P/E Ratio = 15
Individual Stocks having High P/E Ratio
Current State of the market
Overvalued Stocks
Warns that market will not necessarily
continue to grow
3. CENTURY OF STOCK MARKET HISTORY
7

8
1972
1972 1973-1974
1973-1974

Safety + Stability > High Returns
Key Principles:
Diversification across a range of industries and
asset classes.
Focus on Quality - High Quality stocks and
bonds with a long history of stable earnings and
dividends.
Avoiding Excessive Trading Activity which
can cause high expenses and significantly erode
investment returns.
4. GENERAL PORTFOLIO: THE DEFENSIVE INVESTOR
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Short-term goals
Long-term goals
Risk tolerance
Time horizon
Investment Goals
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5. The Defensive Investor and Common Stocks
How should an individual's personal situation be taken into account when selecting securities
for their portfolio, in light of the general investment policy discussed in this chapter?
Income level
Expenses
Current assets
Liabilities
Financial Situation
Regulatory constraints
Tax considerations
Liquidity needs
Ethical and social considerations
Investment Constraints

Rule 1: There should be adequate diversification
Rule 2: Each company selected should be large, prominent, and conservatively financed.
Rule 3: Each company should have a long record of continuous dividend payments.
Rule 4: The stocks should be bought at a price that is not too high.
Rules to be followed by The defensive investor
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Growth Stocks and Defensive Investor
A growth stock is a stock that has increased its per-share earnings at a rate higher
than common stocks and is expected to continue to do so in the future.
IBM has been the leading growth stock, but it has experienced significant market
price declines in the past.
Growth stocks are uncertain and risky for the defensive investor, who should
instead consider large companies that are relatively reliable

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6. Portfolio Policy for the Enterprising
Investor: Negative Approach
The punches you miss are the ones that wear you out.
—Boxing trainer Angelo Dundee
What does Graham suggest about diversifying your bond portfolio
with foreign bonds compared to today's options, and what are his
"don'ts" for aggressive investors when it comes to high-yield bonds?

Junkyard Dogs: High-yield
bonds
Foreign bonds with poor credit
ratings
Unfamiliar foreign currencies
Long-term bonds with low
credit ratings
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Graham's "Don'ts" for
Aggressive Investors
Exchange-traded funds (ETFs)
Bond mutual funds
Corporate bonds with high credit
ratings
Treasury Inflation-Protected
Securities (TIPS)
Today's Options for
Diversifying Bond
Portfolio

ETFs: Low fees and diversification, but risk
of market fluctuations
Bond mutual funds: Professional
management and diversification, but
potential for high fees
Corporate bonds with high credit ratings:
Higher yields than government bonds, but
risk of default
TIPS: Protection against inflation, but lower
yields than other options.
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Advantages and
Risks of Each Option
Importance of
carefully considering
options for
diversifying bond
portfolio
Balancing risk and
potential returns
Monitoring and
adjusting portfolio as
needed.
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2.
3.
Conclusion

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What factors contribute to the seemingly unstoppable rise of growth
stocks such as General Electric, Home Depot, and Sun Microsystems,
and how can investors navigate the unpredictable market fluctuations that
often accompany them?
7.Portfolio Policy for the Enterprising
Investor: The Positive Side
It requires a great deal of boldness and a great deal of caution to make a great
fortune; and when you have got it, it requires ten times as much wit to keep it.
—Nathan Mayer Rothschild

The impact of timing
General Electric's decline
Home Depot's struggle to adapt
Sun Microsystems' downfall
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The fall of growth
stocks
Market conditions and trends
Company management and
leadership
Innovation and technology
Financial performance and
metrics
Factors contributing to
growth stock success

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Strategies for Buying Big Growth Stocks
Focusing on Industry Leaders
Investing in Companies with a Clear
Growth Strategy
Paying Attention to Valuation
Metrics
Diversifying Your Portfolio

The importance of diversification
The need for continued innovation
and adaptation
The role of timing in investing
Balancing risk and reward in
growth stocks
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Lessons learned from growth stock

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8. Investing in Investment Funds
What are the advantages and disadvantages of investing in mutual funds, which
were introduced in 1924 by Edward G. Leffler and are known for being affordable,
convenient, diversified, and professionally managed?
Types of mutual funds
Equity funds
Bond funds
Money market funds
Hybrid funds

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Pros of investing in mutual funds
Diversification
Professional management
Low cost
Convenient
Cons of investing in mutual funds
Lack of control
Fees and expenses
Risk of underperformance
Tax implications

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What are the high-risk obstacles that investors face when investing in funds that
produce high returns, as discussed in the article, including migrating managers, asset
elephantiasis, no more fancy footwork, rising expenses, and sheepish behavior?
Manager Migration
Definition and explanation of manager migration
Risks involved with manager migration
How to identify funds with high risk of manager migration
Strategies for mitigating risks associated with manager migration

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Asset Elephantiasis
Definition and explanation of asset
elephantiasis
Risks involved with asset elephantiasis
How to identify funds with high risk of
asset elephantiasis
Strategies for mitigating risks
associated with asset elephantiasis
No More Fancy
Footwork
Definition and explanation of no more
fancy footwork
Risks involved with no more fancy
footwork
How to identify funds with high risk of
no more fancy footwork
Strategies for mitigating risks
associated with no more fancy footwork

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Rising Expenses and Sheepish Behavior
Definition and explanation of rising expenses and
sheepish behavior
Risks involved with rising expenses and sheepish
behavior
How to identify funds with high risk of rising
expenses and sheepish behavior
Strategies for mitigating risks associated with
rising expenses and sheepish behavior

Satisfactory
P/E Ratio
A Sound Investment
Strong
Financial
Position
Longevity of
Performance
9. The Investor and Market Fluctuations
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Correct
Timing
Right
Pricing
Profit
from
Pendulum
Swings
Where to Invest? A Swing Trader's Strategy

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Graham's Message: "Kryptonite for the Bear Market"
Be scarcely "forced
to sell" your shares
Don't focus on short
term fluctuations but
instead in the long
term underlying value
of the company.
Don't be stampeded by
unjustified market declines
Investors overly concerned with
market fluctuations, are prone to
make poor investment decisions.
Don't let other's poor judgement
affect your investment decisions.
Don't overvalue market
quotations
Market quotations are
widely defined by the supply
and demand of the stock and
do not reflect the true valued
potiential of the company.
This chapter provides a valuable reminder that market fluctuations are a normal and inevitable part of
investing, and that investors should maintain a disciplined, long-term approach in the face of volatility.

10. The Investor and his Advisors
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Need and
Importance?
Evaluation
Metrics
Investor's
Responsibility
Trust or Not?
This chapter provides detailed guidance on how to evaluate financial advisors and avoid unethical
advisors, while emphasizing the importance of maintaining an independent mindset and taking personal
responsibility for investment decisions.

F
i
n
a
ncial Ana
l
y
s
i
s
Security
Analysis
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11. Security Analysis for the Lay Investor
This chapter emphasizes the importance of conducting thorough security analysis. The chapter provides
practical guidance on how to approach stock selection.
Management
Factors
Affecting
Capitalization
Rate Dividend Record
Current Dividend Rate

30%: Increase in average daily flights
16: New international routes launched or
announced
1,200: New employees added to the workforce
2x: Increase in average daily revenue of the airline
Source: Business Standard
Publish Date: January 27, 2023
The Takeover Success: Air India 2.0
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12. Things to Consider About Per-Share Earnings
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Earnings per share (EPS) is calculated by dividing a company's net income by the total
number of outstanding shares.
Case Study
Non-recurring events, results
high EPS value, which
misguided the investors.
Long-term earning trends
were volatile to Aluminium
prices and production levels.
Observation Solution
Use of Average Earnings.
A 10-year and 7-year mean
is "useful for ironing out"
fluctuations in company
profitability and business
cycle.
This chapter warns against using per-share earnings as the sole metric for evaluating a company and
highlights the importance of examining other factors.

13. A Comparison of Four Listed Companies
Eltra Corporation
Emerson Electric Company
Emery Air Freight
Emhart Corporation.
The four companies which Graham compares are
1.
2.
3.
4.
Graham’s detailed comparison of the companies is based on a collection of
financial data compiled.
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Chief Elements of Performance
Profitability
Stability
Growth
Financial Position
Dividends
Price History.
We’ll use the tables below to take a closer
look at
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14. Stock Selection for the Defensive Investor
Adequate size
A sufficiently strong financial condition
Continued Dividends for at least 20 years
No earnings deficit in the past ten years
Ten-year growth of at least one-third in per-share earnings
Price of stock no more than 1.5 times net asset value (NAV)
Price no more than 15 times average earnings of the past three year.
Graham takes us through what we should look for in stocks if we’re going to pick
stocks and are of the Defensive Investor disposition.
The Seven Quality and Quantity Criteria
1.
2.
3.
4.
5.
6.
7.
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15. Stock Selection for the Enterprising
Investor
Graham notes that he cannot offer one particular style for all aggressive
investors, but suggests that they consider all of the reasonable market that fits
their parameters at an original paring of results.
The better way is to look for cyclical enterprises , when the current situation
is unfavorable, the near-term prospects are poor, and the low price fully
reflects the current pessimism.
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16. Convertible Issues and Warrants
Graham explains what the investor should understand about
convertible bonds and preferred stocks. He opens by defining stock-
option warrants as : long term rights to buy common shares at
stipulated prices.
Graham also cautions that convertible issues can be complex and
difficult to evaluate. He advises investors to carefully examine the
terms and conditions of a convertible issue before investing, paying
particular attention to the conversion ratio, the conversion price, and
the yield to maturity.
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17. Four Extremely Instructive Case Histories
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Invest in co.
with strong
financial
discipline
NVF Corp.
Wait for a better
buying opportunity
Patience and
discipline in
investing
Ling-Temco-Vought
Inc. Not to rely on
speculation
alone
Importance of
diversification
AAA Enterprises.
Importance of
analyzing
financial
statements
Penn Central Co.
Emphasizes the importance of value investing and thorough analysis of statements and balance
sheets. Serves as a valuable guide for investors, providing practical examples of how to apply the
principles of value investing in practice

A B
1 Real Estate Investment Trust
Realty Equities Corp. of New
York
2 Air Products and Chemicals Air Reduction Co.
3 American Home Products Co American Hospital Supply Co.
4 H&R Block, Inc. Blue Bell, Inc.
5
International Flavors &
Fragrances
International Harvester Co.
6 McGraw Edison McGraw-Hill, Inc.
7 National General Corp. National Presto Industries
8 Whiting Corp. Willcox & Gibbs
18. A Comparison of Eight Pairs of Companies
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By comparing the companies on
multiple criteria, the author
provides readers with a
comprehensive analysis of the
investment opportunities presented
by each pair of companies.
Bold - Better investment
opportunity than other

Dividend Policy
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19. Shareholders and Managements :
Higher growth potential
Lower growth potential
High payout ratio
Lower payout ratio
Companies with -
Dividend payout ratio, which is the
proportion of earnings paid out to
shareholders as dividends.
Graham suggests that investors should
consider the dividend policy as part of their
overall investment analysis. Advises investors
to be cautious of companies that have a high
dividend payout ratio but low earnings or
unstable financials, as this may be an
unsustainable dividend policy.

Margin of safety is a principle of investing through which investors purchase securities
only when their market price is below their intrinsic value.
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20. "Margin of Safety" as the Central
Concept of Investment
Margin of Safety - Not JUST a Defensive Concept
Emphasizes the importance of the margin of safety as a key principle of successful investing, and
provides guidance on how to use this concept to identify undervalued stocks and minimize risk in
investment.

CONCLUSION
It recommends companies with strong financials, a competitive advantage,
and a reliable track record, as well as a margin of safety.
It also emphasizes the importance of discipline, patience, and emotional
control in the investment process, and that investors should stick to their
investment strategy and avoid making impulsive decisions.
The Intelligent Investor emphasizes that investment should be made with a
long-term perspective and a focus on fundamental analysis.
1.
2.
Overall, investing requires a rational and disciplined approach, with a focus
on long-term value creation rather than short-term gains. 39

THANKS!
Any questions?