Which version of The Intelligent Investor is best?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
mule-tech
Posts: 10
Joined: Fri Feb 12, 2021 1:32 pm

Which version of The Intelligent Investor is best?

Post by mule-tech »

I see there are several editions of The Intelligent Investor. Maybe 6? Each has been updated and edited from the original along the way. Is there one that is considered by the investing community to be "the best"? I know that's a subjective term. Perhaps I should ask is one edition a better read than another or one edition more sought out than another?

Thanks!
All Seasons
Posts: 226
Joined: Sun Dec 10, 2017 4:14 pm

Re: Which version of The Intelligent Investor is best?

Post by All Seasons »

I consider myself to be something of an amateur historian when it comes to the different versions of The Intelligent Investor.

First things first. There are 6 different versions of the book. The first 5 versions have been labeled in a confusing way that has made people over the years think there is one fewer than there really is. Why? Because you'll notice that the second edition is referred to as the "first revised edition" and the third edition is referred to as the "second revised edition" and so on. This has made people think that "second revised edition" means second edition when that actually makes it the third edition.

It is much easier to refer to the 6 different versions by original publishing date

- 1949
- 1954
- 1959
- 1965
- 1973
- 2003

For the most part, you may disregard 1949, 1954, and 1959 versions unless you want to read them out of historical curiosity. The 1965 edition contains all of the content in those previous versions but also includes updates, new material, and new formulas. Largely, the only thing omitted in the 1965 version that is present in previous versions is the outdated examples of individual stock issues in the analysis chapters. They were, of course, replaced with up to date examples for the time.

The 1965 edition is the best edition of the book in my opinion. It contains the most practical advice for passive investors, and the most comprehensive advice for enterprising investors. The famous "Graham Formula" is present in this edition as well. This tome is a true gem that reads very much like an "essentials" version of the much larger text Security Analysis. I personally own 2 copies of the 1965 version and guard them carefully.

The 1973 edition represents a significant departure in both philosophy and approach relative to earlier revisions. Graham eschews the detailed approaches for finding bargain issues found in previous editions in favour of more systematic filtering systems. These were clearly intellectual precursors to modern factor funds. The book, overall, is somewhat disjointed as Graham retained some chapters from earlier versions but inserted entirely new chapters with new machinations (not just updates). There are inconsistencies such as Graham's recommendation of a maximum P/E ratio of 15 for defensive investors in chapter 14 but stating a higher maximum ratio in chapter 4. Again, this stems from the fact that the book is really an amalgamation of old and new essays. This may have been rather expected given that Graham credits his collaboration with Buffett on this edition. The real gem in this revision of the book is chapter 12, which deals with accounting confabulations that can distort EPS numbers.

The redheaded stepchild in the bunch is the 2003 "update" of the 1973 version of the book with Jason Zweig's commentary. I don't even want to waste energy expounding on this nonsense. Reading Graham's elegant writings mixed in with Zweig's rubbish such as the "Vodka and Burrito Portfolio" (yes that's an actual quote from the book) makes this a tragic tarnishing of Graham's work.

Bottom line, stick with the 1965 version if you want the pure Grahamian approach to security analysis. Read the 1973 version if you want a more "modern" filtering system with echoes of Buffett's influence (and the ever so faint foreshadowing of EMH). The 1973 version pretty much screams for a small cap value + quality fund.
User avatar
Forester
Posts: 2088
Joined: Sat Jan 19, 2019 2:50 pm
Location: UK

Re: Which version of The Intelligent Investor is best?

Post by Forester »

Graham was ahead of his time, one of the first quants. Today he would be an indexer / factor investor.
User avatar
midareff
Posts: 7664
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Which version of The Intelligent Investor is best?

Post by midareff »

That's a very easy question... the one that is the best is always the other one, the one you didn't pick.
mikejuss
Posts: 1033
Joined: Tue Jun 23, 2020 1:36 pm

Re: Which version of The Intelligent Investor is best?

Post by mikejuss »

I would imagine that the latest edition has the most up-to-date information. Why would you want an older edition?
GRP
Posts: 207
Joined: Wed Nov 22, 2017 5:35 pm

Re: Which version of The Intelligent Investor is best?

Post by GRP »

All Seasons wrote: Thu Jun 17, 2021 3:35 am
Wow. Thanks for the excellent post.
User avatar
permport
Posts: 251
Joined: Sat Mar 31, 2018 11:20 am

Re: Which version of The Intelligent Investor is best?

Post by permport »

GRP wrote: Thu Jun 17, 2021 2:07 pm
All Seasons wrote: Thu Jun 17, 2021 3:35 am
Wow. Thanks for the excellent post.
+1

Great insight.
Buy right and hold tight.
123
Posts: 7573
Joined: Fri Oct 12, 2012 3:55 pm

Re: Which version of The Intelligent Investor is best?

Post by 123 »

mikejuss wrote: Thu Jun 17, 2021 7:30 am I would imagine that the latest edition has the most up-to-date information. Why would you want an older edition?
The author of The Intelligent Investor, Benjamin Graham, passed away in 1976. Publisher often try to keep classic titles "alive" by doing updates and revisions. With the death of the original author publishers have to rely on others for updates and those updates may stray from the original author's vision. They may add material to make the work appear contemporary but that added material can quickly become outdated.
The closest helping hand is at the end of your own arm.
Topic Author
mule-tech
Posts: 10
Joined: Fri Feb 12, 2021 1:32 pm

Re: Which version of The Intelligent Investor is best?

Post by mule-tech »

Thanks for the replies, everyone! :happy
Post Reply