The Intelligent Investor - Book Review

Introduction

• Obvious growth in physical prospects of a business do not necessarily translate to profits for investors
• It was easy to forecast that the value of airtraffic would grow spectacularly over the years. But despite the expansion in revenues at a pace far greater than the computer industry, a combination of technological problems and overexpansion in capacity led to disastrous profit figures. 
• Same happened for Uber in 2015. Even though the rides volume grew massively till 2020, any investment in late 2015 saw negligible gains at the time of IPO. 
• Experts do not have a dependable way of selecting the most promising companies in the most promising industries
• The pendulum in stock markets swings from irrational exuberance to unjustifiable pessimism

Investment vs Speculation

• Investors judge the market price by establishing standards of value
• Speculators base their standards of value based on the market price
• The intelligent investor has no interest in being temporarily right. To reach your long term financial goals, you need to be reliably and sustainably right.

The Investor and Inflation

• As recently as 1973-82, the US went through one of the most painful bursts of inflation. As measured by CPI, prices more than doubled during that period rising at the rate of nearly 9% annually. In 1979, inflation raged at 13.3% paralyzing the economy in what is known as stagflation, and many leading commentators began questioning whether America could lead in the global marketplace.
• In times of deflation, it is better to be a lender than a borrower, which means that investors should keep atleast a small portion of their investment in bonds, as a form of insurance against deflating prices. 
• The stock market lost money money in 8 of the 14 years in which inflation exceeded 6% and the average returns of these years was a measly 2.6%. 
• While mild inflation allows companies to pass on the increased costs of the raw materials to customers, high inflation wreaks havoc forcing customers to slash their purchases and depressing activity through the economy. 
• Asset classes for inflation protection - REITs and TIPs. 
• Commentary for 2020 recession : At the time of this writing, REITs may be risky. As we get more clarity into how shallow/deep this recession is going to be, there is a fair chance that commercial REITs may suffer heavy losses as the lockdown extends as the virus will now spread to new hotspots into the heartland of America. 

A century of stock market history