What Buffett Learned From Ben Graham

While he was no doubt born with some natural gifts, Warren Buffett didn’t become history’s greatest investor without any help. Buffett many times has praised his mentor, the late, great Benjamin Graham, for shaping his investing approach, and in a recent piece for Business Insider, Richard Feloni looked at some of the key lessons Buffett learned from the man known as “The Father of Value Investing”.

“Warren Buffett spent his late teens consuming as many books on stocks and investing as possible,” writes Feloni. “When he picked up a copy of Benjamin Graham’s new book The Intelligent Investor in 1949, his life was changed.”

Buffett applied to and was accepted at Columbia Business School, where Graham taught, and a lifelong friendship and mentorship was born. Drawing from Alice Schroeder’s book, The Snowball: Warren Buffett and the Business of Life,¬†Feloni says Buffett learned three main principles from Graham that “established the foundation of his investing approach”. Among them: “Mr. Market is your servant, not your master.” Explains Feloni: “Graham used ‘Mr. Market,’ a moody and easily excitable character, to personify the stock market. He asked his students to imagine Mr. Market as their business partner, who would present them with the offer to buy and sell stocks every day. The prices he offers are ultimately irrational and based on emotion. Every now and then, however, he’ll give you a chance to make a profit by buying low and selling high. The lesson is that you should restrain from giving into market hysteria, grounded by your own researched value estimates.”

To read about the other two lessons, click here.