Benjamin Graham: The Memoirs of the Dean of Wall Street - Investment Revolutions

by Geoff Gannon

Benjamin Graham died in 1976. In 1996: His memoirs were published. They sold for $28. Today, they’re out of print. Used copies sell for $75. They’re worth every penny.

…intrinsic value and investment merit were destined to assume increasing importance in common-stock analysis after 1914. As a newcomer uninfluenced by the distorting traditions of the old regime – I could respond readily to the new forces that were beginning to enter the financial scene. I learned to distinguish between what was important and unimportant, dependable and undependable, even what was honest and dishonest, with a clearer eye and better judgment than many of my seniors, whose intelligence had been corrupted by their experience. To a large degree, therefore, I found Wall Street virgin territory for examination by a genuine, penetrating analysis of security values.

(Benjamin Graham: The Memoirs of the Dean of Wall Street)

When I read Graham I think of Kuhn. Graham was a revolutionary. When he wrote Security Analysis in 1934, Graham redefined words like “intrinsic value”, “margin of safety”, and “investment” to fit his value paradigm. He tore down the pre-1914 system. Graham could say a cheap stock was a sound investment. That was gibberish to the generation before him. Their definition of investment was: “not a stock”. Graham flipped the investment universe so it spun round the analyst instead of the market. Every word was redefined in terms of security analysis.

Benjamin Graham didn’t add to a body of knowledge. He stormed the Bastille.