In this episode Preston and Stig discuss billionaire Warren Buffett’s favorite investing book, The Intelligent Investor by Benjamin Graham. The world’s most successful investor read this book when he was 19, and Warren Buffett has several times praised it as the very foundation for shaping his investment philosophy.

The book has also shaped Preston and Stig investing strategy, and the core principles are the very same that The Investors Podcast is built upon. Actually Stig is so excited about the book that he decided to create a chapter by chapter video course of The Intelligent Investor, and you can learn more about the course here.

In this episode, you’ll learn:

  • Why The Intelligent Investor is Warren Buffett’s favorite book
  • Why inflation is perhaps the most overlooked macro investing metric
  • When and how you should conduct active and passive investing
  • Why Warren Buffett thinks that chapter 8 and 20 are the two most important chapters of The Intelligent Investor in investment literature
  • How to calculate the intrinsic value of a stock and why Preston and Stig disagree with Warren Buffett

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BOOKS AND RESOURCES

Stig’s Chapter by Chapter video course for: The Intelligent Investor
Preston and Stig’s summary book for: The Intelligent Investor – Read Reviews of this Book
Benjamin Graham’s original book: The Intelligent Investor – Read Review of this book
Preston and Stig’s summary book for: Security Analysis – Read Review of this book
Benjamin Graham’s original book: Security Analysis – Read Review of this book

VIDEOS THAT SUPPORT THIS PODCAST

Learn more about this course

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2018-04-25T11:42:24+00:00

5 Comments

  1. Ante
    Ante May 29, 2016 at 10:58 pm - Reply

    Good day guys,

    I would just care to remark on Buffett’s use of the risk free rate for discounting company cash flows.

    As I understand it, you wouldn’t discount the FCF, rather the “persistant” cash flows which being lower than FCF could justify using a lower discount rate such as 10Y Treasury yield. This would then not result in inflated valuations.

    Thank you for doing such a great job, guys.

    Best regards,
    Ante

  2. Stig
    Stig June 1, 2016 at 12:02 pm - Reply

    Ante,

    We would basically discount whatever cash flow that would be “normal” for that company. FCF would be my first choice.

    The discount rate should not be 10Y treasury, but rather S&P500 if you look at the opportunity costs or a customized rate where you include all the risk factors.

    Great question!

    -Stig

  3. Joanna
    Joanna July 1, 2016 at 7:58 pm - Reply

    I don’t see the link to the video on how to calculate the intrinsic value/discount. I’d really love to see that. I’m using your podcasts as one part of my self directed investor education!

  4. Michael Vogiatzis
    Michael Vogiatzis August 25, 2016 at 9:31 am - Reply

    Hi guys,

    +1 on how to calculate the intrinsic value/discount.

    Awesome show, thanks.

    Michael

  5. Qais
    Qais October 10, 2016 at 12:02 pm - Reply

    A nice wrench thrown at the buffet’s Intrinsic value calculation…great job.

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