Stepping into the River
Just like no man steps into the same river twice, reading a worthwhile book multiple times continues to yield new insights over the years.
“No man ever steps in the same river twice, for it’s not the same river and he’s not the same man.”
― Heraclitus
Books that have enduring value yield additional insights when they are read multiple times.
In many cases, it is worthwhile to read a book a second time immediately, especially if the topic is very complicated or unfamiliar. But more often, it makes sense to put a great book on the shelf for a period of time before revisiting it. This gives the reader time to accumulate more life experiences and this alone will result in different insights being gained from the same words. Physical books never change, but the reader inevitably changes over years and decades.
Benjamin Graham died in 1976 and his final edition of The Intelligent Investor was published a few years before his death. This is the version that I read in the fall of 1995 shortly after I read Buffett: The Making of an American Capitalist by Roger Lowenstein. It is impossible to adequately explain how much of an impact these two books had on my personal investments over the years. I read both of them multiple times within a short period and took to heart the lessons they taught. As a result, I was able to sidestep the carnage of the dot com bubble that I would have otherwise surely succumbed to. Had I lost my early seed capital at the turn of the century, my current net worth would be much diminished.
We are fortunate to have two editions of The Intelligent Investor published long after Benjamin Graham’s death with additional commentary by Jason Zweig. The version published in 2003 featured much commentary applying Graham’s teachings to the dot com bubble which was a recent event at that time. The version published in 2024 focuses on the stock market gyrations following the pandemic bear market in early 2020. At some point, I might write up a review of the latest version, but for now I feel inspired to comment more generally on how the book’s message has impacted my thinking over nearly three decades.
When I first read The Intelligent Investor in 1995, I was twenty-two years old and a new college graduate. Despite my degree in business with a concentration in finance, I had scant practical knowledge about investing. The Intelligent Investor provided an intellectual framework that made immediate sense compared to my college textbooks. I immediately identified with Graham’s “enterprising investor” and was certain that I could compound my modest savings at high rates of return by following his methods. The 1973 version of the book had no commentary updating it to mid-1990s conditions but that was no great impediment and certainly did not curb my enthusiasm.
Two lucky real estate transactions, the accumulated savings of nearly a decade, and solid market returns put me in a far more secure financial position when I read the 2003 version with Jason Zweig’s updated commentary. If anything, I was a bit too arrogant about sidestepping the dot com bubble and ever more confident that I could beat the market as an “enterprising investor” even though I had a full time job in a field unrelated to investing. I was stepping into the same river, albeit with updated commentary, but my life experiences had not given me any humility regarding my capabilities.
I gained a good dose of life experience and humility in the 2008-09 market decline. There are pitfalls associated with early success, especially when that success was due more to luck than to skill. In early 2009, I began investing on a full time basis and my diminished net worth had to fund my living expenses in addition to serving as the base for my future wealth. To say this was a stressful period is an understatement, but I again went back to Graham and took to heart his prescriptions. Still committed to being an “enterprising investor,” I redoubled my efforts but became too risk averse in retrospect.
I learned from my mistakes and the past fifteen years have been successful, partly due to the overall rise in the market but also due to my temperament and the intellectual fortitude that came from taking Benjamin Graham’s principles seriously. Of course, Warren Buffett and Charlie Munger served as living role models and I expanded my reading far beyond Graham. While not earth shattering, the investment of time and effort as an “enterprising investor” created measurable value that provided a good degree of financial security.
Just as churchgoers hear the same Bible verses year after year and hopefully learn something new every time, I am finding new insights from The Intelligent Investor as I read through it this fall. Jason Zweig has added much value to the original text, which remains fully intact. But I’m a far different person at fifty-one than I was at twenty-two, both in terms of my financial resources and my motivation to be an “enterprising investor.” I am in more of a defensive mindset due to being older and having more to lose from mistakes.
Am I an “enterprising investor” or a “defensive investor” today? I find myself in the uncomfortable position of not being able to adequately answer this question. On one hand, there is a great deal of merit to knowing what is “enough” and turning one’s attention to other interests later in life. But on the other hand, I still enjoy certain aspects of the “game” of investing, as opposed to speculation. I like the process of understanding a business, evaluating its prospects, and trying to determine its intrinsic value. The issue is that I have no ability to do this on anything close to a full time basis, and I know that if I try to pick stocks, I am competing with fanatics who are willing and able to devote their entire lives to the process.
Benjamin Graham has been dead for nearly a half century, but he can still “speak” to me through the pages of The Intelligent Investor. However, he cannot tell me whether I should try to actively pick stocks or not, nor can he tell me what type of asset allocation to set based on my personal circumstances and level of risk aversion. He provides a menu of rational approaches and it is up to the reader to select the one that best fits. In doing so, the reader has to know himself above all else. Someone who aspires to be an “enterprising investor” who is not willing or able to put in the necessary time and effort is likely to veer unknowingly into speculation.
I doubt that my current reading of The Intelligent Investor will be my last. I will return to this book several more times in my life, especially as I get closer to old age. I might have difficulties regarding whether I should be “enterprising” or “defensive” today but there will be no confusion in twenty years.
I know that I will have no desire to pick stocks in old age and will prefer a simple, “set it and forget it” approach that can withstand whatever vicissitudes the world throws at me, especially if cognitive decline sets in. This is a real risk for people who were active in investing earlier in life since the person experiencing decline is often the last person to realize it. The possibility of building a considerable estate over a lifetime to lose it late in life with delusions of being an “enterprising investor” is not pleasant to think about.
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