Benjamin Graham: The Memoirs of the Dean of Wall Street

I enjoyed this book, but it is not a book on investing.  Here is my rough breakdown of the book:

• 40% Ben Graham’s childhood

• 30% Early work experience up until the Great Depression
• 10% His personal life with family and others.
• 10% His late-Depression successes in investing up to 1940.

• 10% His efforts as a playwright and as an amateur economist.

So, here’s my biggest gripe about the book: in many ways, Ben Graham’s biggest days as an investor — his greatest times of success in the 1940s & 1950s don’t get mentioned at all.  I learned more of what he was like in that era from reading Alice Schroeder’s The Snowball.

Should this surprise us?  No.  Ben Graham wanted to live the good life in modern terms.  From his time as a youth, he was hard-working, growing up amid poverty, and he never wanted to be poor as an adult.

He was a very bright guy on many topics. He was not only studied in the humanities (which he loved more), he was exceptionally good at math.  The book does not describe him in these words, but he was the first hedge fund manager, and the first quantitative investor.

What made Graham a lot of money was realizing that convertible bonds and preferred stocks carried a valuable option that was often undervalued, and so he would buy the convertible security and short common against it.  Strategies like this, plus activist investing, where he uncovered information advantages on undervalued stocks allowed him to become wealthy.

And that was enough for him.  Unlike his more focused protege, Warren Buffett, once the game got too tough, and a pleasant retirement was attractive, he trotted into the sunset, with modest contact with his former friends in investing.

The book does not describe his time teaching at Columbia, nor any of the great investors that he influenced.  Ben Graham was interested in investing, but he was more interested in the humanities, and generally having a happy time.  Thus, if you read this book, realize that it is about a slice of the life of Ben Graham.  The first half of his life comes in great detail.  The last half of his life comes almost not at all.

But this is not an autobiography, it is a memoir.  As such, Graham tells us what he wants to tell us, and leaves the rest unsaid.  He tells us a little about his thoughts on marital infidelity, but does not tell us how his ending companion ended up being his deceased son’s wife.

All that said, we get what Graham wanted to reveal to us.  Janet Lowe’s book on his life is more comprehensive on his later days… even Alice Schroeder gives us more on his later life by accident of covering Buffett.

In summary: this isn’t primarily a book on investing.  It is a book on the thinking of one very bright man who invested and did well, and used the freedom that money brought for his own ends, both for good and for bad.

Quibbles

Already expressed.

Who would benefit from this book:  If you want to know the early life of Ben Graham, this is a great book.  Beyond that, you will be disappointed.  If you want to, you can buy it here: Benjamin Graham: The Memoirs of the Dean of Wall Street.

Full disclosure: I borrowed it from the local library.

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By: David Merkel, CFA of alephblog