This man's student became worth $166 billion. The teacher died worth just $3 million. Yet without the teacher, the student would never have succeeded. Here's how Benjamin Graham created Warren Buffett (and the principles he taught him):
In 1929, Benjamin Graham was living the American dream. Columbia University professor. Successful investment partnership. Bright future ahead. Then October 29 hit. Black Tuesday and its consequences wiped out 90% of his wealth. Graham was financially destroyed...
Most investors would quit after losing everything. Graham did the opposite. He spent the next decade studying what went wrong. Why did smart people make such terrible investment decisions? His conclusion shocked Wall Street:
"The market is not a weighing machine but a voting machine." Prices weren't based on value. They were based on emotion. Fear and greed drove stock prices, not business fundamentals. Graham realized this was an opportunity.
He developed a systematic approach: Buy stocks trading below their "intrinsic value." Ignore market sentiment completely. Treat stocks like pieces of businesses, not lottery tickets. The math was simple. The execution was hard.
Graham's method was revolutionary. Instead of predicting the future, he analyzed the present. Balance sheets. Cash flows. Asset values. If a company was worth $10 but trading for $6, he bought it. Patient capital always wins:
His first big success came in 1934. Northern Pipeline Company stock traded at $65. But Graham calculated they had $95 per share in cash and securities. He bought aggressively and forced management to distribute the excess cash. Pure profit from mathematical analysis.
1949: Graham published "The Intelligent Investor." The book laid out his value investing principles: Margin of safety. Mr. Market. Circle of competence. One Columbia student read every word multiple times. His name?
Warren Buffett. He called it "the best book on investing ever written." He bought Berkshire Hathaway stock for $7.50 in 1962. Applied Graham's principles for 60+ years. Today, Berkshire trades above $800,000 per share. Graham's student became the world's greatest investor.
But Graham's influence goes beyond Buffett. His students include: Walter Schloss Mario Gabelli Seth Klarman Joel Greenblatt Each built a billion-dollar fortune using his methods.
Graham died in 1976 worth $3 million. His student Buffett is worth $166 billion. The teacher created the framework. The student perfected the execution. Both prove that math beats emotion every time. But here's what many overlook:
While his methods work in theory, markets today are more efficient. Finding obvious bargains like Northern Pipeline is nearly impossible. Even Buffett evolved beyond pure Graham strategies. The real problem?
His method requires discipline that most investors lack: Buy low. Sell high. Be patient. When markets crash, Graham disciples buy more. When markets soar, they sell and wait.
Graham's approach requires discipline that most humans don't have. When your portfolio drops 30%, fear kicks in. When stocks are soaring, greed takes over. Even knowing the right strategy, emotions sabotage execution. The solution Graham never had?
Remove human emotion entirely. Automated systems follow the rules without fear or greed. No panic selling. No FOMO buying. No second-guessing. Just disciplined investing that can compound wealth over decades:
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That's it. Thanks for reading. Follow me @LogWeaver, for more stories like this.
