If you cannot resist the urge to bet on the next big growth stock, set strict limits on speculation. Invest in a stock only when you can comfortably own it without following its daily share price. In contrast, investment is made on a thorough analysis of the underlying business to ensure the safety of principal and adequate - but not extraordinary - gain. Speculators buy hot stocks based on future growth prospects. An attempt to outsmart the market by spending a little extra time and effort will primarily result in below-average gains.Ĭonfusing speculation with investment can be a costly mistake. However, even a marginal improvement from this result is challenging and requires extraordinary knowledge and skill. Defensive investors can achieve a decent result with minimum effort and capability.

Part-time investors should stick to defensive investment strategies. An enterprising investor does not take more risks than a defensive investor but invests more in stock selection. Enterprising investors devote most of their time to manage their portfolios actively. Defensive investors aim to protect their capital from losses, generate decent returns and minimize frequent decisions. The Intelligent Investor by Benjamin Graham gives you everything you need to equip yourself with the investor's mindset necessary to avoid the panic of market fluctuations that plague the ordinary investor. Warren Buffett calls the Intelligent Investor ''by far the best book on investing ever written.''īenjamin's proven value investing approach replaces risky attempts to project future share prices with sound investments based on the underlying value of the company's tangible assets. However, it will teach you how to reduce risk, protect your capital from loss and reliably generate sustainable returns over the long run. This book will not teach you how to beat the market.

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