On this day, 131 years ago, May 9, 1894 (April 5, 1894 in the lunar calendar), Buffett's teacher Benjamin Graham was born. Benjamin Graham, a master securities analyst, whose theories and thoughts of financial analysis have had a great influence in the investment field. He is called the "Godfather of Wall Street" and he is the "master of the generation" Benjamin Graham. Benjamin Graham was born in London on May 9, 1894. When he was an infant, he moved to New York with his parents during the gold rush in the United States. Graham completed his early education at Brooklyn Middle School. When studying at Brooklyn Middle School, he not only had a strong interest in literature and history, but also had an unusual love for mathematics. He likes the rigorous logic and inevitable consequences shown in mathematics, and this logical reason is always the most lacking in the financial investment market, which is characterized by blindness and impulsiveness. After graduating from Brooklyn High School, Graham was admitted to Colombia University to continue his studies. In 1914, Graham graduated from the University of Colombia with honors and second in his class. In order to improve his family's financial situation, Graham needed to find a better paying job. For this reason, he gave up the opportunity to stay in school and joined Wall Street under the strong recommendation of Principal Cabell. In the summer of 1914, Graham came to Newberg, Henderson and Lauber as an information officer, mainly responsible for posting bond and stock prices on the blackboard, earning a weekly salary of $12. Although this job is one of the lowest occupations on the New York Stock Exchange, the future "godfather of Wall Street" began his legendary investment life on Wall Street. In fact, Graham's ability was quickly proven. In less than three months, he was promoted to research report writer and developed his own unique concise and logical style. Securities Analysis At Newberg, Henderson and Lauber, Graham began to be fully familiar with a complete set of operating and management knowledge of the securities industry, including securities trading procedures, market analysis, purchase and shipment timing, stock market environment, etc. Practical operating methods. Although Graham had no formal business school education, this experience derived from hands-on experience was far more profound and powerful than the description in books, which also laid a solid foundation for his future exploration of stock theory. Soon after, Graham was promoted to securities analyst. Promotion to securities analyst was the real beginning of Graham's career. At that time, the analysis of securities was still at a relatively primitive and crude stage, and investors generally believed that stocks were too speculative and too risky, so most people preferred stable bond investments. Graham, on the other hand, decided to take advantage of companies that hid large amounts of assets. He began to collect data from various channels such as listed companies themselves, government management units, news reports, and insiders. Through research and analysis of the collected data, he searched for companies with large amounts of hidden assets. In September 1915, Graham noticed a mining development company with multiple copper ore interests, the Goeberheim Company. The company's share price was US$68.88 per share at that time. After Graham learned that the company was about to be dissolved, he collected relevant information about the company through various channels, conducted a detailed technical analysis of the company's minerals and stock price, and discovered that the company still had a large number of unknown hidden assets. Through calculations, Graham accurately determined that there was a huge price difference between the market value of the company's stock and the actual asset value. From this, he concluded that investing in the company's shares would bring good returns and advised Mr. Newberg to buy the stock in large quantities. Mr. Newberg accepted Graham's advice. When Gothenheim announced its dissolution in January 1917, Neuberg, Huntson and Lauber made hundreds of thousands of dollars in profits from the deal, and its return on investment was as high as 18.53%. Later, Graham was invited by some relatives and friends to try to make private investments. At the beginning, the private investment Graham operated did achieve good returns, but the "Sasu Tire Incident" that occurred a year later taught Graham a vivid lesson. Since then, Graham has learned two lessons: one is not to trust so-called "inside information"; the other is to remain highly wary of human manipulation of the market. Graham In 1920, Graham was promoted to a partner in Newberg, Henderson and Lauber; in early 1923, Graham decided to set up his own business and established the Grange Private Fund with a capital of US$500,000. Granger Fund has been in operation for one and a half years, and its investment return is as high as more than 100%, much higher than the 79% increase in the average stock price during the same period. However, due to differences of opinion between shareholders and Graham on the dividend plan, the Granger Fund finally had to be dissolved; at the end of 1934, Graham completed his long-awaited book "Securities Analysis", which established his immortal status as a master of securities analysis and the "Godfather of Wall Street". In the book, Graham mentioned that a successful investor should follow two investment principles: one is to strictly prohibit losses; the other is to never forget the first principle. Based on these two investment principles, Graham proposed two safe stock selection methods: the first stock selection method is to buy company stocks at a price less than 2/3 of the company's net asset value; the second method is to buy company stocks with low P/E ratios. Of course, the premise of these two stock picking methods is that these company stocks must have a certain margin of safety. The econometric analysis methods and value evaluation methods elaborated in "Securities Analysis" reduce investors 'blindness and add more rational elements. This book shocked investors in the United States and Wall Street when it was published. For a time, it became a must-read for people in the financial and investment circles. In 1956, while Wall Street was still on the rise, Graham, who had been struggling on Wall Street for 42 years, decided to retire from Wall Street. Graham Newman had to announce its dissolution because no suitable person could be found to take over Graham Newman. Graham chose the University of California to start his coaching career after disbanding Graham Newman. He wanted to spread his ideas to more people. The theory of securities analysis created by Graham with his own efforts and wisdom has influenced generations of investors. A large number of disciples he cultivated, such as Warren Buffett and others, emerged on Wall Street and became a new generation of investment masters, continuing Graham's theory of securities analysis. Buffett's teacher Benjamin Graham Graham gives six major advice to investors: 1. Be a real investor Graham believes that although speculation has a certain position in the securities market, because speculators only seek profits without paying attention to the analysis of the intrinsic value of stocks, they are often easily influenced by "Mr. Market" and fall into the misunderstanding of blind investment. Once the stock market fluctuates, they often lose their money. Cautious investors, on the other hand, only make investment decisions based on adequate research, take much less risks and can obtain stable returns. 2. Pay attention to avoiding risks. People believe that profits and risks are always proportional in the stock market, but in Graham's view, this is a misunderstanding. Graham believes that making profits by minimizing risk, or even making profits without risk, is essentially high profits; it is not impossible to obtain high profits under a low-risk strategy; high risks and high profits There is no direct connection. It is often because investors take a lot of risks, but what they gain is only the risk itself, that is, they suffer losses or even lose everything. Investors cannot invest recklessly, but should learn to invest rationally and always pay attention to avoiding investment risks. 3. Use a skeptical attitude to understand that a company's share price continues to rise driven by its future performance. Investors should not blindly chase after the increase, but should understand the true situation of the company with a skeptical attitude. Because even with the strictest accounting standards, near-term earnings may be forged by accountants. Moreover, the company's adoption of different accounting policies will cause great differences in the company's calculated performance. Investors should pay attention to carefully analyzing whether these new performance increases are real increases or are caused by the accounting policies adopted, especially the additional content of the accounting report. Any incorrect expectations will distort the face of a company, and investors must make assessments as accurately as possible and pay close attention to its subsequent development. 4. When doubts arise, think about quality issues. If a company has good operations, low debt ratios, high capital returns, and dividends have been paid out for some consecutive years, then the company should be an ideal investment for investors. As long as investors buy shares of such companies at a reasonable price, investors will not make mistakes. Graham also reminded investors not to rush to abandon the stocks they hold because of their temporary poor performance, but to be patient enough and will eventually get rich returns. 5. A well-planned investment portfolio Graham believes that investors should rationally plan their investment portfolio and flexibly allocate the proportion of funds in their hands based on changes in the price of stocks and bonds. When the profitability of stocks is higher than that of bonds, investors can buy more stocks; when the profitability of stocks is lower than that of bonds, investors should buy more bonds. Of course, Graham also reminded investors that using the above rules is only effective during a bull market in the stock market. Once the stock market falls into a bear market, investors must promptly sell most of their stocks and bonds and keep only 25% of their stocks or bonds. This 25% of stocks and bonds is set aside for future stock market turns. 6. Pay attention to the company's dividend policy While paying attention to the company's performance, investors must also pay attention to the company's dividend policy. A company's dividend policy not only reflects its risks, but also is an important factor supporting stock prices. If a company adheres to a long-term dividend payment policy, it means that the company has good "constitution" and limited risks. In comparison, companies with high dividend policies usually sell at a higher price, while companies with low dividend policies usually sell at a lower price. Investors should regard the company's dividend policy as an important criterion for measuring investment.