Saturday, January 12, 2013

Examining Benjamin Graham’s Record: Skill Or Luck?

by Tobias Carlisle, Greenbackd

Two recent articles, Was Benjamin Graham Skillful or Lucky? (WSJ), and Ben Graham’s 60-Year-Old Strategy Still Winning Big (Forbes), have thrown the spotlight back on Benjamin Graham’s investment strategy and his record. In the context of Michael Mauboussin’s new book The Success Equation, Jason Zweig asks in his WSJ Total Return column whether Graham was lucky or skillful, noting that Graham admitted he had his fair share of luck:
We tend to think of the greatest investors – say, Peter Lynch, George Soros, John Templeton, Warren Buffett, Benjamin Graham – as being mostly or entirely skillful.
Graham, of course, was the founder of security analysis as a profession, Buffett’s professor and first boss, and the author of the classic book The Intelligent Investor. He is universally regarded as one of the best investors of the 20th century.

But Graham, who outperformed the stock market by an annual average of at least 2.5 percentage points for more than two decades, coyly admitted that much of his remarkable track record may have been due to luck.
John Reese, in his Forbes’ Intelligent Investing column, notes that Graham’s Defensive Investor strategy has continued to outpace the market over the last decade: (more)

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