Intelligent Investing! Stock-picking tips from Benjamin Graham and Warren Buffett

Your purpose in buying stocks is to make money in the market, not lose it! Tips from these investors could help you succeed.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

I’d be surprised to find a shareholder who hasn’t heard of Warren Buffett, arguably the world’s most successful long-term investor, but you may not be so familiar with his idol and mentor Benjamin Graham.

Ben Graham wrote the first serious handbook for novice investors, The Intelligent Investor, back in 1949. This book provided a structural logic to security analysis and Buffett credits its wisdom to his ongoing success at value investing.

Graham died in 1976 but his legacy lives on in the book and many old and new investors consider it an essential read to this day.

Picking stocks for 2020

Whether you go on to achieve outstanding results from your financial portfolio of stocks, will depend on your effort, intelligence and the madness of the market. Both Buffett and Graham believed you don’t have to be particularly clever to make money in the stock market, simply astute.

One of my favourite lines from the book is to “follow and profit from folly in the market, rather than participate in it.” This is because market swings and fluctuations can be caused by external factors outside our reach and sometimes these are unexpected. This is not a time to panic or be greedy, but to think and apply the knowledge you’ve gained to purchase shares in good companies at bargain prices.

With the political chaos present in the UK at the moment, it seems a relevant time to take note and choose your stock investments carefully.

There are still many quality companies trading on the London Stock Exchange that have had their prices suppressed thanks to Brexit negotiations, hold-ups and general media furore.

This means there are great bargains to be had in 2020, as long as you do your research and don’t make any hasty decisions.

Make money, don’t lose it

All investors are looking to make money, but this is not as easy as it sounds. If you can make money, you can also lose it and that’s why being forewarned is being forearmed.

Research and preparation make you a shrewd investor and by taking the time to study annual reports and read articles such as this one, you are giving yourself a head start at making money in the stock market.

Three lessons Buffett learned from Graham was how to minimise the chance of suffering irreversible losses, how to maximise sustainable gains and how to control self-destructive behaviour that stops investors from reaching their potential.

The answers lie in choosing strong companies with solid management teams and structure, a decent income and the potential to grow.

Choosing industries that are most likely to grow in the future, then identifying the most promising companies within these industries is an excellent starting point.

In my opinion, anything that helps the fight against climate change and improves our health are areas that are heading for future advancement. Artificial intelligence, bio-tech, virtual reality and genomics are all areas of growth and all involve technology.

Whether you’re a defensive investor or an enterprising one, you’d do well to heed Benjamin Graham’s advice and follow in the footsteps of legendary billionaire Warren Buffett on your road to riches.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »