[Summary]
Benjamin Graham is an investor's mindset that emphasizes margins of safety and undervalued investments.
Benjamin Graham's story is not only a story about reading the market, but also a material for checking where you tend to get impatient.
In actual investment, the starting point is to look at the difference between corporate value and stock price. However, it is important to note that it is easy to judge a stock to be cheap just by looking at its low P/E ratio.
In this article, we will organize Benjamin Graham's information not as "knowledge" but as steps to check before buying or selling. Don't rush to conclusions, read according to your financial amount and time horizon.
First thing to separate by Benjamin Graham
When looking at Benjamin Graham, first determine what you want to judge. The information you need will change depending on whether you want to know the meaning, confirm before buying or selling, or review your current holdings.
Especially for beginners in investing, the easier the words are, the more they tend to take them as a conclusion. Benjamin Graham is not something to judge on its own. If you want to check it, it is more realistic to look at it in conjunction with fund management, holding period, and opposing materials.
Benjamin Graham and emotional misalignment
If we look at Benjamin Graham's investment psychology, we first need to make narrow assumptions. It is important not to mix up whether you are talking about the market as a whole, individual stocks, NISA or long-term funds.
Checking the following points will make things a lot easier.
| Axis to check | What to see in Benjamin Graham |
|---|---|
| purpose | What do you use to judge? |
| Time axis | Which is closer to short-term trading, long-term holding, or NISA? |
| basis | Which one is more important: price, business performance, interest rates, exchange rates, or psychology? |
| risk | When things go the other way, where should you look again? |
| action | Will it lead to buying, selling, or doing nothing? |
Points that can easily cause trouble in making decisions
When it comes to Benjamin Graham, it's not just lack of knowledge that stumbles. In fact, there are situations where we interpret something conveniently because we know a little bit about it.
- Record your feelings of impatience and relief when you see Benjamin Graham
- Write down the same number of reasons why you want to buy and reasons why you don't.
- Wait a day before making decisions after unrealized losses or sudden rises.
- Reduce trading amounts on days when emotions are strong
The important thing here is not to rely solely on Benjamin Graham as the correct answer. In investment, the meaning of the same material changes depending on the market, holding period, and amount of funds. When in doubt, prioritize confirmation over conclusion.
Checklist before buying and selling
Please check at least these five things before making any judgments about Benjamin Graham.
- Can you explain in one sentence the purpose of watching Benjamin Graham?
- Have you confirmed one or more countermeasures or failure conditions?
- Are you investing your living funds or money that will be used soon?
- Have you decided in advance the criteria for cutting losses, taking profits, and continuing to hold stocks?
- Are you making judgments based only on social media or short headlines?
Checklists are simple, but they prevent you from adding reasons after making a decision. The purpose of checking Benjamin Graham is not to make you act faster, but to reduce unnecessary errors in judgment.
Summary
Benjamin Graham is a resource for organizing your investment decisions. Even if you read it as an investment psychology, if you treat it as a standalone buy or sell signal, your judgment will be inaccurate.
The points to keep in mind are as follows.
- Decide the purpose of seeing Benjamin Graham first.
- Do not mix time axis and amount of funds
- Check not only good materials but also negative materials
- When using NISA and long-term funds, consider how to handle losses
- When in doubt, reduce your position or postpone it.
The more knowledge you have, the safer it seems, but in the market it can become dangerous if you use it incorrectly. It is realistic to treat Benjamin Graham's words as a tool to pause before buying or selling, rather than as a word to rush into judgment.