Thread by @BrianFeroldi

Warren Buffett's favorite book:

Securities Analysis by Ben Graham

Here are the most powerful lessons every investor should know:

1. Investing versus speculating

Investors make decisions based on the facts and value of the asset.

Speculators make decisions based on other participants' behaviors.

Know the difference:

2. Good business vs. bad business

Graham defines in simple terms what makes a business "good".

The inverse of these conditions makes it "bad."

Investors should focus on buying good businesses.

3: Left brain + right brain thinking

The numbers are essential, but Graham believed good analysis must include qualitative factors, too.

4: "Intrinsic value" is a moving target.

The value of a business changes over time. It's not a fixed number.

Investors must understand that value of a business is dynamic and subject to change.

5: Focus on earnings power

The bigger the fluctuations in a company's earnings, the less reliable your valuation analysis will be.

Focus on companies with predictable futures.

6: Use history, not just the latest earnings report.

Rather than emphasizing the recent results, Graham averaged the companies' history.

Look further back at a company's operating results before you conclude.

7: Change is not something to profit from, but guard against.

This is a core principle that Buffett has put into practice for decades.

8. Think like a private business owner:

- How much money must I put up?
- How much cash will I get back?
- How fast?

"Why should investors in publicly traded stocks ask different questions?"

9: Focus on dividends & income, not the future price.

Don't just count on capital appreciation. Focus on income & dividend potential first and capital appreciation as a bonus.

This shift will cause you to think like an owner.

Like this thread? Follow me @BrianFeroldi.

I teach investors how to analyze businesses.

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