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Book Summaries Business

Chapter 4: General Portfolio Policy: The Defensive Investor (The Intelligent Investor)

The conventional wisdom is that the investor should match the amount they risk with their risk tolerance. But Graham says that the amount of risk that is taken should depend instead on the amount of intelligent effort the investor is willing and capable of expending and doesn’t depend on age either.

The defensive/passive investor should expect an average return. The enterprising investor can expect higher returns.

The defensive investor can divide his portfolio between stocks and bonds/cash. Portfolio rebalancing should happen when valuations change the asset allocations.

"Silence is the best expression of scorn" - G.B. Shaw

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