4 Steps to Correctly Read the Intelligent Investor for Indian Investors
Imagine you thought to buy The Intelligent Investor by Benjamin Graham, excited to learn the secrets of investing, when you open the book and started reading and find yourself drowning in talk about bonds, convertible issues, and historical market events that seem totally irrelevant to India. Also the long chapters. Sounds frustrating, right?
But don’t worry—we’ve got you covered. Instead of reading the book cover to cover and getting lost Although it is one of the best book on investing worldwide but still you don’t need to read the chapters that may not add much value to the Indian market, you can read the book in more strategic way. Let’s begin on how to read The Intelligent Investor in a way that actually helps you invest smarter in India.
Why Should You Read The Intelligent Investor?
Before we get into how to read it, let’s talk about why you should read it in the first place.
Benjamin Graham is also called as the father of value investing. His principles shaped legendary investors like Warren Buffett and many more.
The book basically teaches you about the –
- How to think long-term in investing.
- Why emotions are your biggest enemy in the stock market.
- How to analyze stocks with logic, not speculation?
But biggest catch that nobody talks about—the book was written in the 1940s for the US market. Many of its examples and investment products (like US bonds) may not be directly relevant to Indian investors today. That’s why a selective reading approach is best to get the qualitative output. Also to get more on the Psychology part of the money I would suggest you to read on the Psychology of money by Morgan Housel. And to get practical tips you can also read the Let’s Talk Money by Monika Halan
If you want practical takeaways without wasting time on outdated or less relevant sections, here’s a curated reading plan:
Start with Chapters 1, 8, and 20 (Mindset and Market Psychology)
These three chapters will completely change your view towards the investing.
Chapter 1: Investment vs. Speculation – It helps you differentiate between real investing and gambling. In India, many people treat stocks like lottery tickets. This chapter will keep you on the right path. As most of the people in market invest on some random experts’ advice or on the speculation of the advisor.
Chapter 8: Mr. Market – The stock market behaves like a moody friend—sometimes excited, sometimes depressed. This chapter teaches you how to use market fluctuations to your advantage.
Rather than tracking market my personal experience says to track the fundamentals of your stocks. Also, don’t fall for the bullish run and track your stocks fundamental.
Chapter 20: Margin of Safety – The most important concept in investing. It teaches you how to buy stocks at a price low enough to protect yourself from losses. that’s always important to keep yourself with the margin to play around or exit the stock on the time.
Indian Adaptation: When the Nifty 50 crashes, don’t panic—use it as an opportunity to buy good stocks at a discount. Buying good stocks means buy the blue cheap stocks which have good fundamentals. Check out the article on Stock fundamental.
Read Chapters 4, 5, and 14 (How to Pick Stocks in India)
This is where you get into the meat of value investing.
Chapter 4: The Defensive Investor – Perfect for investors who don’t want to actively track stocks. It suggests a simple, low-risk portfolio strategy. As in the long-term you have seen the people who have vision of the year on tear progress of the stock or who have patience make money in the market.
Chapter 5: The Enterprising Investor – For those who are willing to do more research to pick undervalued stocks. It can be little risky but you can make handsome profit with the good analysis and stock selection.
Chapter 14: Stock Selection for the Defensive Investor – A practical checklist to filter good stocks from bad ones. You can also check to the – for short read to select the stocks and ratios checklist while selecting the stock.
Indian Adaptation: If you want to play it safe, you can follow the defensive investor approach and stick to a mix of index funds and fundamentally strong blue-chip stocks. As blue chip funds are the only ones which you can rely on the value investing.
Chapter 11 and 12: Understanding Financial Statements & Avoiding Pitfalls
Chapter 11: Financial Statement Analysis – Teaches how to read balance sheets and income statements. This is crucial if you want to analyze Indian companies.
Chapter 12: How to Avoid Financial Frauds – Talks about how companies manipulate numbers. This is super relevant for India, where corporate governance issues and accounting frauds are common. They are simple pump and dump cases.
-Indian Adaptation: Look out for companies with excessive debt, unrealistic earnings growth, or frequent promoter pledging.
Chapters You Can Skip (Or Read Later)
Not all chapters are equally useful for Indian investors. You can skip (or read later) the following:
Chapters on Bonds (2, 3, 6) – Unless you’re into fixed-income investing, these chapters are less relevant in an equity-focused Indian portfolio.
Chapter 16: Convertible Issues and Warrants – These instruments are not commonly used by retail investors in India.
Chapters 9, 10, 13, 15, 17-19 – These dive into niche concepts or US-specific historical references that won’t directly impact your investing decisions.
Key Takeaways for Indian Investors
- Think long-term. Don’t chase short-term gains or hot stock tips.
- Use market fluctuations wisely. Buy when others are fearful (market crashes).
- Always have a margin of safety. Never overpay for a stock, no matter how promising it looks.
- Stick to solid, fundamentally strong companies. Avoid speculative stocks with no profits or excessive hype.
- Don’t let emotions control your investments. Stay disciplined.
Final Words
Reading The Intelligent Investor can be overwhelming, but by following this roadmap, you’ll get the most valuable insights without unnecessary confusion. If you apply even half of these lessons, you’ll be way ahead of most retail investors in India. As lot of lessons are timeless it applied everywhere.
What are your thoughts? Have you read The Intelligent Investor yet? Let me know in the comments!