'Benjamin Graham' is explained in detail and with examples in the Investments edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.
Benjamin Graham was born in 1894 in London, the then British Empire to an importer. When he was still young, his family moved to the United States to open up an import business. Despite his father dying shortly thereafter and his mother subsequently losing the family savings in 1907 to a financial crisis, Graham excelled in school and attended Columbia University afterward, which even offered him a teaching professorship after he graduated.
Rather than enter the world of academia full time, Benjamin Graham accepted a job with Newburger, Henderson, and Loeb on Wall Street as a chalker. He soon did fantastic financial research for the company and achieved the impressive status of partner before turning 25 years old. At this still young age, Graham was already earning more than half a million dollars per year, a vast fortune in the 1920s, equal to over $5 million per year in today’s drastically devalued dollars.
Graham was not content with this incredible success. He started his own investment company partnership with a fellow broker Jerome Newman in 1926. This firm lasted thirty years through his retirement in 1956. Graham also began to lecture as a finance professor at Columbia in his free time at night.
Graham nearly suffered total financial destruction as a victim of the “Black Monday” Crash of 1929. His fledgling partnership managed to survive the national crisis thanks to the two partners selling most everything they owned and getting some aid from friends who had fared better during it. Graham’s wife also returned to dance teaching to help pull the company through. Graham never forgot this most painful and humiliating of lessons once he got back on his proverbial feet with the partnership. It provided him with a number of valuable stop loss management lessons to share with his legions of readers in years to come.
By 1934, Benjamin Graham was writing and publishing his classic work Security Analysis with fellow Columbia academic David Dodd, a volume which remains in print to this day. The book featured countless valuable stories and instructions for how to invest in common stocks successfully using prudent investment practices. In this book, Graham and Dodd co-introduced the idea of the intrinsic value investment and their eternal wisdom on how to buy stocks at a discount to their true value.
Graham and Newman continued their legendary investment partnership all the way through 1956 and never again lost their clients any money. The earnings of the company were a difficult to replicate 20 percent returns annually at a time when the S&P 500 earned 12.2 percent per year.
Thanks to his moonlighting stint at Columbia as economics and investment professor, Graham met a young student named Warren Buffet and eventually consented to hire him after he graduated. Legendary billionaire investor Buffet has never forgotten either the education or the start his beloved mentor Graham gave him in the business, acknowledging Benjamin Graham as the investing master guru to this day.
Graham and Buffet combined their powers to pick out insurance company GEICO, a firm that has made both Buffet’s Berkshire Hathaway group and Benjamin Graham’s heirs a vast fortune. Graham and Newman bought the company outright in 1948 and then had to convert it to a public company and distribute shares to their partnerships’ investors because of regulations that prohibited investment firms from owning insurance companies.
Benjamin Graham also wrote what is still called the Bible of Value Investing in 1949 a few years before he ultimately retired. This work The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel, has also never stopped being in print. In 1976 after 20 years in retirement, legendary investor, teacher, and writer Benjamin Graham finally died. He had justified his ongoing reputation as “Father of Security Analysis” for more than 80 years.
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