- The Bank
- People
- All Services
- Private Banking
- Savings and Investment
- GoBulling Platforms
- Institutional and Corporate
- Insights
- Login My.BancoCarregosa
- Contacts
Enter your Username to gain access to your Bank. Complete your authentication on the next screen.
If you are not yet a client, open your account here or contact us for more information
Investing like Benjamin Graham: 4 key tips


Ben Graham is widely regarded as the father of stock analysis and value investing. It’s no coincidence that more than 75 years after it was first published The Intelligent Investor remains one of the world’s most popular books on investing and personal finance. Discover the key financial lessons that continue to inspire investors around the world from this investor, author and philanthropist.
Who was Benjamin Graham?
Born in the UK in 1894, Benjamin Graham was an economist and investor widely recognised for his pioneering approach to investing. Throughout his career, he dedicated himself to identifying assets that were undervalued by the market, a strategy that would become known as value investing and revolutionise the financial world of his time.
Fonte: Greenbackd
As a lecturer at Columbia Business School, he was a mentor to such iconic figures as Warren Buffett, Irving Kahn and Walter J. Schloss. In addition to The Intelligent Investor, his literary works include Security Analysis, co-written with analyst David Dodd, which remains one of the most influential books in the history of investing.
Although his personal life was marked by challenges, including the early death of his father and several financial crises, Graham went on to build an unwavering legacy in the investment world that continues to inspire new investors to this day.
How can you invest like Benjamin Graham?
Graham is renowned for his methodical and reasoned approach, with an emphasis on rigorous analysis and buying assets at prices below their intrinsic value. Not only did he emphasise the importance of patience and discipline as essential factors for long-term success, but he also left us with other relevant lessons in a market that is often characterised by speculation and volatility.
1. Make sure you always invest with a margin of safety
Ben Graham introduced the concept of the "margin of safety”, which consists of buying a security at a significant discount to its intrinsic value. This strategy not only provides opportunities for high returns, but also minimises the downside risk of an investment.
Graham even defined this margin in quantitative terms: he argued that the main objective should be buying assets that are worth at least twice their market price. To apply this strategy effectively, he began by identifying companies whose net assets were worth more than their market capitalisation. He would also select companies with a risk rating of "B”, on a scale that usually ranges from D to A+.
By buying companies at less than their true value, Graham was able to limit potential losses while benefiting from the market’s re-rating. This cautious strategy enabled him to weather some of the biggest crises in financial history.
What to do:
• Assess the intrinsic value of a company through in-depth analysis of its assets, earnings and growth potential;
• Look for stocks trading at prices below their intrinsic value;
• Ensure that the difference between the market price and the intrinsic value is large enough to provide an effective margin to protect against a potential fall in value.
2. Bet on Blue Chips
Benjamin Graham pointed out that most investment funds could not beat the benchmark indices. That’s why he recommended investing directly in blue chip stocks – large, financially sound companies like Coca-Cola – that are members of indices such as the S&P 500 or Dow Jones.
Graham’s favourite stocks, which are now classified as high quality, had balance sheets with good liquidity, tangible assets and a moderate level of debt. The investor had a clear preference for large, consolidated companies in the market, particularly those with stable earnings and a consistent dividend policy.
In essence, his strategy was to find quality at attractive prices. Like many investors today, he used two main indicators: the price/earnings ratio (P/E) and the price/book ratio (P/B). He preferred companies with a P/E ratio of less than 15 and a P/B ratio of less than 1.5. However, he accepted higher P/B ratios if the P/E was low enough. For this reason, he also valued the combination of the two ratios, making sure that the product between them did not exceed 22.5.
What to do:
• Invest in well-established companies with a proven track record of stable earnings and consistent dividend payments;
• Assess the liquidity and fixed assets in the balance sheet;
• Be disciplined and patient and avoid frequent changes to your investment strategy.
3. Take advantage of volatility
Volatility is an inherent part of the financial markets. However, experienced investors such as Ben Graham stand out for their ability to identify and take advantage of the opportunities that arise during these times. This issue was so important to Graham that it inspired the character of "Mr Market” in his book The Intelligent Investor. This character is a metaphor for the emotional and irrational behaviour of the stock market. Graham compared it to a business partner who, every day, offers buying and selling prices influenced by extreme swings of optimism or pessimism. This character was intended to illustrate the importance of investors being patient and not reacting to the whims of the market. According to the author, investment decisions should be based on sound, rational analysis, not momentary emotion.
On a more practical level, Graham introduced the concept of dollar cost averaging to minimise the impact of market volatility. This technique involves buying equal amounts of investments at regular intervals. According to Graham, this approach helps reduce the impact of volatility by removing the pressure of trying to find the perfect time or price to invest.
What to do:
• Practice dollar-cost averaging, investing fixed amounts regularly to avoid the risk of buying at their peak.
• Diversify between stocks and bonds to preserve capital and benefit from growth, adjusting your strategy as the market changes.
4. Identify your investor profile
Benjamin Graham divided investors into two main categories: the active (or entrepreneurial) investor and the defensive investor.
To become an active investor, Graham argued that it was essential to be prepared to invest time and energy, which meant carrying out detailed research and monitoring investments closely. He reformulated the idea of "risk = return” to "work = return”, emphasising that the more effort put into investment decisions, the greater the chances of achieving significant returns.
If on the other hand you prefer a more passive approach (a defensive investor), you can achieve solid returns with less effort by investing in products that track a benchmark index. This is also a way of being an efficient investor, which often means accepting an average return.
As Graham said, "The rate of return sought should be dependent, rather, on the amount of intelligent effort the investor is willing and able to bring to bear on his task.”
What to do:
• Consider how much time and effort you are willing to invest in analysing investments to decide whether to take an active or passive approach;
• If you choose to invest actively, focus on sectors or companies you know well;
• If you prefer a passive approach, consider allocating capital to index funds or ETFs to ensure diversification;
• Monitor the performance of your investments on a regular basis and reassess the value of the companies and adjust your decisions as necessary;
• Use trading platforms that you are comfortable with and that suit your investor profile and needs.
Banco Carregosa, to maximise your investor profile
Several generations of investors continue to recognise the value of Benjamin Graham’s invaluable knowledge. His teachings emphasise the importance of having a team of experienced professionals with a deep understanding of the financial market. Contact us to help you with your investment decisions.