THE FIRST EDITION OF The Intelligent Investor was published in 1949. It was written by Benjamin Graham, the most respected money manager of his era. The Intelligent Investor is regarded as the best book of its kind—comprehensive, analytical, perceptive, and forthright—a book for the ages.
Although Benjamin Graham is best known for his focus on the kind of value investing represented by the category of stocks he described as “bargain issues,” he cautioned, “the aggressive investor must have a considerable knowledge of security values—enough, in fact, to warrant viewing his security operations as equivalent to a business enterprise . . . armed with mental weapons that distinguish him from the trading public. It follows from this reasoning that the majority of security owners should elect the defensive classification.”
Investors should be satisfied with the reasonably good return obtainable from a defensive portfolio.
Why? Because “[the majority of investors] do not have the time, or the determination, or the mental equipment to embark upon such investing as a quasi-business. They should therefore be satisfied with the reasonably good return obtainable from a defensive portfolio, and they should stoutly resist the recurrent temptation to increase this return by deviating into other paths.”
The first index mutual fund was not formed until ...