The Intelligent Investor

“In a more general sense, the later-used phrase ‘reckless investors’ could be regarded as a laughable contradiction in terms—something like ‘spendthrift misers’ were this misuse of language not so mischievous.”

Graham comments on the use of the phrase “reckless investors” in a 1970 newspaper article to illustrate the degree to which speculation has become confused with investing. In Graham’s opinion, “reckless investors” is an oxymoron because investing is, by definition, not reckless. Graham defines investors as individuals who carefully analyze and assess the potential risks and rewards of an investment before making a decision.

“And selling short a too popular and therefore overvalued issue is apt to be a test not only of one’s courage and stamina but also of the depth of one’s pocketbook. The principle is sound, its successful application is not impossible, but it is distinctly not an easy art to master.”

Graham highlights early in the book just how important emotional fortitude is in successful investing. He pairs this with a refrain that he repeats in the rest of the chapters, which is that active investing—involving stock selection with the goal of earning above-average returns—is much harder than it looks.

“But trading as if your underpants are on fire is not the only form of speculation. Throughout the past decade or so, one speculative formula after another was promoted, popularized, and then thrown aside […] and all of them violated at least one of Graham’s distinctions between investing and speculating.”

This passage demonstrates two aspects of Zweig’s writing. First, it shows his blunt and vivid writing style, which often employs imagery and metaphors to make a point. Second, it serves as an example of how Zweig reiterates and extends Graham’s teachings by applying them to more recent events.