The Intelligent Investor

A bear market refers to a market characterized by falling prices and investor pessimism. Unlike many investors, Graham sees bear markets as an opportunity for the intelligent investor to find undervalued stocks and potentially generate higher returns in the long run.

Book value refers to the net worth of a company or its assets minus its liabilities. Book value is often used as an indicator of the intrinsic value of a company.

A bull market refers to a market characterized by rising prices and investor optimism. In a bull market, securities tend to experience upward price trends. Unlike many investors, Graham sees bull markets as a time of caution rather than celebration.

A defensive investor is a term coined by Graham to describe an investor who wishes to spend less time and effort on investment analysis and is more focused on the preservation of capital and minimizing risk.

Diversification is the practice of spreading investments across different assets or sectors to reduce risk. In The Intelligent Investor, Graham encourages investors to diversify their portfolios between stocks and bonds to protect against fluctuations in the market and increase the likelihood of positive returns. Zweig specifically encourages investors to use low-cost index funds to diversify their investments across a wide range of assets and sectors, rather than trying to pick individual stocks.

A dividend is a payment made by a corporation to its shareholders, usually in the form of cash or additional shares of stock. Dividends are often distributed from a company’s profits and are a source of income for shareholders.

The DJIA, or Dow Jones Industrial Average, is a stock market index. It measures the performance of 30 large, publicly traded US companies; the index’s components are selected by a committee. Established by Wall Street Journal cofounder Charles Dow, the DJIA is one of the oldest market indexes in the world.

An enterprising investor is a term coined by Graham to describe an investor who is willing to devote more time and effort to investment analysis and seeks opportunities for higher returns.

An index fund is a type of mutual fund or exchange-traded fund that is designed to replicate the performance of a specific market index such as the S&P 500. Index funds are passively managed funds that aim to match the performance of a specific market index.

Inflation refers to the general increase in prices of goods and services over time. In the context of The Intelligent Investor, inflation is an important factor to consider when making investment decisions. Graham discusses inflation when considering the balance of stocks and bonds in the intelligent investor’s portfolio. Zweig also characterizes inflation as inevitable since national governments are incentivized to maintain an increase in the general price level to decrease the real burden of their debts.

Investment funds are pools of money that are managed by financial professionals. These funds collect money from multiple investors and invest it in a diversified portfolio of assets such as stocks, bonds, and other securities.

In the context of The Intelligent Investor, “issues” refers to the specific stocks or bonds that an investor may choose to include in their portfolio.

The margin of safety is a concept that plays a crucial role in value investing. It refers to the difference between the intrinsic value of a stock and its market price.

Market value refers to the current price at which a financial asset or security can be bought or sold in the market. Market value is an important concept in The Intelligent Investor as it is used to assess the potential of a firm’s securities.

The S&P 500 is a stock market index that measures the performance of 500 of the largest companies traded on US stock exchanges. Since it considers various criteria, the index is not an exact reflection of the top 500 companies by market capitalization alone; regardless, the S&P 500 is considered one of the most reliable barometers of the stock market’s overall performance.

Securities refer to tradable financial assets such as stocks, bonds, and derivatives. In the context of The Intelligent Investor, securities refer to the various investment options available to investors, including individual stocks and bonds.

Tangible assets are physical assets that have a discernible value, such as real estate, machinery, or inventory. Graham recommends that investors choose stocks “selling not far above their tangible-asset value” (9).