Value Investing: Investing in stocks that trade below their intrinsic value, with a 'margin of safety' to protect against adverse events.
Mr. Market: The stock market is irrational in the short term, represented by 'Mr. Market' who offers prices based on emotion; investors should not follow his moods.
Distinction between investing (long-term, based on thorough analysis) and speculation (short-term gamble).
Focus on defensive investing: emphasising diversification, stable companies, and reasonable price-to-earnings (P/E) ratios.
Why It Matters
Called the 'Bible of value investing' by Warren Buffett.
Graham was a mentor to Warren Buffett, one of the most successful investors.