Ben Graham’s 3 Secrets to Living A Good Life

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On SN This Week

• The Right Kind of Investing Education

Ben Graham’s 3 Secrets to Living A Good Life
We know Ben Graham as the father of value investing. His book, The Intelligent Investor, has changed the lives of many, particularly Warren Buffett’s, who was one of Graham’s students at Columbia Business School.

Graham played a significant role in shaping Buffett’s career and investment philosophy. But as Buffett has mentioned at several occasions, Graham’s influence on him extended well beyond lessons on analyzing financial statements.

In a short article in the Financial Analysts Journal, remembering Graham after his death in 1976, Buffett emphasized what he learned from the three things Graham said he hoped — even at the age of 80 — to do every day. He wrote –

Several years ago Ben Graham, then almost 80, expressed to a friend the thought that he hoped to do every day “something foolish, something creative and something generous.”

Let’s talk about each of these.

The word “foolish” often carries a negative connotation, but the implied meaning here has more to do with humility and a willingness to forgo self-importance than anything else. Like this is what Buffett wrote to shareholders in his 1989 letter –

Charlie and I have both total job security and financial interests that are identical with those of our shareholders. We are willing to ‘look’ foolish as long as we don’t feel we have ‘acted’ foolishly.

And this is what he wrote in his 2017 letter –

Though markets are generally rational, they occasionally do crazy things. Seizing the opportunities then offered does not require great intelligence, a degree in economics or a familiarity with Wall Street jargon such as alpha and beta. What investors then need instead is an ability to both disregard mob fears or enthusiasms and to focus on a few simple fundamentals.

A willingness to look unimaginative for a sustained period – or even to look foolish – is also essential.

On the aspect of “creativity,” Buffett wrote this about Graham –

A remarkable aspect of Ben’s dominance of his professional field was that he achieved it without that narrowness of mental activity that concentrates all effort on a single end. It was, rather, the incidental by-product of an intellect whose breadth almost exceeded definition.

That’s the thing about creativity – the willingness and the ability to get over the narrowness of your mind and perceive the world in new ways, to find hidden patterns, to make connections between seemingly unrelated phenomena, and to generate solutions.

Maria Popova of Brainpickings defines creativity this way –

Creativity is a combinatorial force: it’s our ability to tap into our ‘inner’ pool of resources – knowledge, insight, information, inspiration and all the fragments populating our minds – that we’ve accumulated over the years just by being present and alive and awake to the world and to combine them in extraordinary new ways.

Coming to the third aspect of “generosity” that Graham aimed to practice in his daily life, Buffett has often told us –

I benefited enormously from the intellectual generosity of Ben Graham, the greatest teacher in the history of finance.

And here is what he wrote in his 1976 remembrance –

…his third imperative – generosity – was where he succeeded beyond all others. I knew Ben as my teacher, my employer and my friend. In each relationship – just as with all his students, employees and friends – there was an absolutely open-ended, no-scores-kept generosity of ideas, time and spirit. If clarity of thinking was required, there was no better place to go.

And if encouragement or counsel was needed, Ben was there. Walter Lippmann spoke of men who plant trees that other men will sit under. Ben Graham was such a man.

Even leaving aside his generous contributions to the world of investing, Graham was an extraordinary man who left the world with invaluable lessons.

This one especially – of daily being foolish, creative, and generous – can certainly help us lead a wonderful life.

A Few Stories You Shouldn’t Miss

• Does the Financial Media Affect the Stock Market? (The Irrelevant Investor)
• You Can Blame ‘Load Theory’ for Turning Your Brain to Mush (Bloomberg)
• The Ugly Scramble (Morgan Housel)
• ‘Success Addicts’ Choose Being Special Over Being Happy (The Atlantic)
• Thinking For Oneself (Farnam Street)
• The Unschooled Artists (NY Times)

Meditations

One of the most tragic things I know about human nature is that all of us tend to put off living. We are all dreaming of some magical rose garden over the horizon – instead of enjoying the roses that are blooming outside our windows today.

~ Dale Carnegie

You must understand the whole of life, not just one part of it. That is why you must read, that is why you must look at the skies, why you must sing, dance and write poems, and suffer, and understand, for all that is life.

~ J Krishnamurti

A Question for You
Carrying on from Graham’s lesson, ask yourself – What foolish, creative, and generous thing will I do today?

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Have a great weekend.

Stay safe.

With respect,
— Vishal

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