Note: I am reading the revised edition, which has revisions from 1971/1972 along with commentary after all the chapters from 2006.
What This Book Expects to Accomplish
- Set up an investment framework
- Teach a little about history
- Clarify between “investing” and “speculating”
- Why “following the market” is wrong headed
- To convince you that, though conditions change, the principles of doing investing do not.
- Explain passive vs enterprising investing. The rewards for enterprising investors varies based on market conditions.
- The marginal costs of enterprising investing (I.e. not just index investing) are high, so should carefully consider if it’s worth it
- Main objectives:
- Prevent large losses by instilling the proper emotional attitude to prevent you from being your own worst enemy
- Instill a tendency to measure or quantify. Don’t buy stocks based on vibes.
It’s always interesting to read older books and to realize that many of the problems that seem novel for today have actually been around for decades or centuries. There’s mention of a bear market in 1969-1970 that reset expectation from the 1950s and 1960s that all dips should be bought and you would profit in short order. Seems relevant for today.