The world’s greatest investors: Benjamin Graham

Born in London in 1894, his family moved to New York when he was one year old. He studied at Columbia University, and was offered several academic posts after he graduated at the age of 20, but took a job as a messenger in the bond department of Wall Street firm Newburger, Henderson & Loeb. Within six years he was a partner.

In 1923 he left to manage money for private clients. Five years later he began teaching an evening class at Columbia Business School, which become the foundation for his 1934 investment classic, Security Analysis. This was later followed by the 1949 bestseller The Intelligent Investor, which has been reprinted in various editions.

What wasthe strategy of Benjamin Graham?

He advised investors to focus on companies that traded on low multiples of price to earnings (ie, that were cheap compared to the profits they were making). But he particularly liked companies trading at less than the value of their net assets, which he called "cigar butts" (you might be able to get one last puff out of them).

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Did this work?

GEICO was trading at rock bottom, but Graham saw that the firm was cutting costs through selling by post, and it was also selling to low-risk customers. By 1956, GEICO's shares had risen nearly tenfold. Graham was also a key influence on Warren Buffett. Indeed, Buffett who Graham taught as a graduate student at Columbia was invited to take over Graham-Newman in 1956.

What other advice did he have for investors?