Mr. Graham, what advice would you give to a young man

Hartman L. Butler, Jr. (“HB”): Mr. Graham, what advice would you give to a young man or woman
coming along now who wants to be a security analyst and a Chartered Financial Analyst?
Graham: I would tell them to study the past record of the stock market, study their own capabilities,
and find out whether they can identify an approach to investment that they feel would be
satisfactory to their own case. And if they have done that, pursue that without any reference to what
other people do or think or say. Stick to their own methods. That is what we did with our own
business (Graham-Newman Corp.). We never followed the crowd, and I think that is favorable for
the young analyst. If he or she reads the Intelligent Investor—which I feel would be more useful
than Security Analysis of the two books—and selects from what we say some approach which one
thinks would be profitable, then I way that one should do this and stick to it.

….There are two requirements for success in Wall Street. One, you have to think correctly; and
secondly, you have to think independently.

“The only other
way (besides visiting countries around the world yourself) to know what is going on is to study history. When I
teach or speak at universities, young people always ask me: “I want to be successful and travel around the world;
what should I study?”
I always tell them the same thing: “Study history.”
And they always look at me very perplexed and say, “What are you talking about….what about economics, what
about marketing?”
“If you want to be successful, “I always say, “You’ve got to understand history. You will see how the world his
always changing. You will see how a lot of the things we see today have happened before. Believe it or not, the
stock market didn’t begin the day you graduated from school. The stock market’s been around for centuries. All
markets have. These things have happened before. And will happen again.”
Another lesson to learn from studying past market cycles is about market psychology. As the late Peter Bernstein
observed, “In their calmer moments, investors recognize their inability to know what the future holds. In moments
of extreme panic or enthusiasm, however, they become remarkably bold in their predictions: they act as though
uncertainty has vanished and the outcome is beyond doubt. Reality is abruptly transformed into that hypothetical
future where the outcome is known. These are rare occasions, but they are unforgettable: major tops and bottoms
in markets are defined by this switch from doubt to certainty.”
The venerable Ben Graham argued that an investor should “have an adequate idea of stock market history, in
terms, particularly, of the major fluctuations. With this background he may be in a position to form some
worthwhile judgment of the attractiveness or dangers….of the market.”