The Intelligent Investor

I started reading Ben Graham's value investment classic, The Intelligent Investor. For those of you who don't know, Ben Graham was the mentor of the world's richest investor, Warren Buffett. I've been learning various aspects of value investment but never actually looked at the source.

In the first chapter, Graham makes a good point about what makes an investor intelligent -- being able to make wise decisions in the market, rather than simply being book smart or having head-knowledge. He counts the brilliant scientist Isaac Newton among the victims of the South Sea Bubble. The 2003 commentary adds engineers and mathematicians to the list as victims of the dot-com bubble. I can point to many of the same engineers, scientists, professionals, etc, to the list of bubble victims -- the housing bubble, that is.

What does this mean? Well, if you're smart in the conventional sense, you can have a great job in the corporate world, but your intelligence will not take you further. You'll be a corporate drone -- a very well paid one, but a drone nonetheless. If you want a good chance of to becoming financially independent at an early age -- say, before 40 -- then you need good investment sense -- being able to analyze stocks rationally and not get carried away by the turbulent emotional waves of the market.