Blog

Benjamin Graham never slept in an alley or huddled with his brothers over a heating grate. But he did lose his father and witness his mother’s slide to the brink of poverty, spending his formative years living in fear of financial ruin. Humiliating losses on Wall Street rekindled that fear and sparked his invention of Margin of Safety, the central concept of value investing and Ben Graham’s greatest contribution to finance.

Benjamin Graham taught Warren Buffett to hunt for undervalued stock, but the late, great Charlie Munger said: “A lot of Ben Graham’s rise in life was during a period when there was plenty of low-hanging fruit among mediocre businesses that were way too cheap.” “Mediocre and cheap”? Spoiling for a fight, I uncover a profound reason why Ben Graham picked unappreciated stocks that, like him, would surprise everyone if given the chance to prove their worth.

Having charted my grandfather’s course to Wall Street, I feel driven to find out how Benjamin Graham devised value investing. What experiences sparked his ideas? Eagerly, I bury my nose in his books. When I find nothing, this granddaughter turns sleuth. Join me while I uncover his secret skill that no other Wall Street man possessed—a breakthrough that throws fresh light on how Benjamin Graham became “the father of value investing.”

Read the ELECTION SPECIAL EDITION! If the US election is on your mind, you might be interested in the unusual role Benjamin Graham played in the election of 1916. This post will take you from election gambling and The Intelligent Investor, 3rd Ed. to Ben Graham’s values that shaped Warren Buffett. Benjamin Graham, Warren Buffett, and Jason Zweig’s example can help us through the challenges this election and its aftermath may bring.

Flushed with the success of his arbitrage operation, my twenty-two-year-old grandfather set out to marry and make money, only to face setbacks that brought him to the brink of despair. Ben’s early years in finance illustrate that Wall Street isn’t Easy Street. Not even a trailblazing titan is immune from suffering losses. Yet in the face of financial calamity, Benjamin Graham forged a difficult marriage, started a family, and launched his “steady climb toward affluence.”

Benjamin Graham earned acclaim as the “father of value investing” and mentor of Warren Buffett. What an eye-opener to find out that his first brilliant investment didn’t just involve undervalued stock. At age twenty-one, Ben effected an arbitrage operation involving the Guggenheim Exploration Company that earned a tidy profit. (Turns out Mr. Buffett likes arbitrage, too.) Ben Graham’s arbitrage coup set in motion a brilliant career and tumultuous marriage to my grandmother.

I’m not exaggerating when I tell you that Ben Graham witnessed worldwide panic in his first summer on Wall Street. My twenty-year-old grandfather was no seasoned investor. Two months earlier, he’d been about to graduate from Columbia. He wanted to find good employment right out of college. He landed a job at a brokerage firm, only to see the New York Stock Exchange close its doors. How did Benjamin Graham get through the Great Financial Crisis of 1914?

Benjamin Graham met my grandmother when they were both driven teenagers. He saw Hazel as pretty, smart, and remarkably gifted in something that interested him—running a business. The sixteen-year-old director of a dancing school, Hazel assembled a bevy of beaux to assist with an “entertainment” to showcase her young pupils’ talents. Ben wrote the script in rhyme, and joined the band of rivals for her favor—rivals that included his two older brothers and his esteemed Cousin Louis.

I can’t wait to tell you the story of Benjamin Graham’s most exciting college job. He was willing to go to extraordinary lengths to earn big money while enrolled as a scholarship student at Columbia. The teenaged Ben Graham would not only bump into IBM in its infancy, but also earn a princely salary and save enough to invest in a risky enterprise. Join me for a rollicking and formative adventure with Ben Graham, Columbia man.

Take a leap with me into the heart and mind of my nineteen-year-old grandfather when he kissed a girl named Alda on a swing. Read the sonnet Benjamin Graham wrote in the grip of romantic passion. I’m deeply moved by what my aloof grandfather revealed. Together, let’s linger with Ben Graham in 1913 and appreciate his courage in running the gauntlet of first love.

Benjamin Graham, who had no money to pay for college, dreamed of winning a “fabulous” Pulitzer Scholarship. That scholarship would be his ticket to Columbia College—the gateway to a job with big earnings. After a thrilling letter from his brother Victor and an interview at the lofty Pulitzer Building, Ben Graham suffered a “devastating blow.” Would his dream of a tip-top college and a tip-top job be forever out of reach?

The summer sixteen-year-old Ben Graham worked as a farmhand, he began his work day at 5:30 a.m. by milking two cows who were both named Lucy. At night, he read a classic Greek text by kerosene lamp. Arduous labor, a mystery resident, an unexpected visitor, and a shocking realization made his summer unforgettable.

In June of 1910, sixteen-year-old Ben Graham set off to catch the train to New Milford where he’d taken a summer job as a farmhand. At Pavonia Terminal, he made a “stupid blunder.” His mistake didn’t cost him money, the way his future missteps prior to 1930 would. But his train station blunder exacted a price, putting him in a tough situation that tested his fortitude.

As a boy, Ben Graham felt “ill-used” used by his two older brothers, the “delinquent” Victor and the “mischievous” Leon. Ben’s granddaughter sets out to uncover the “sharp words and unfair actions” in Ben’s relationships with his brothers and finds “special fondness,” boyish pranks, and (mostly) hidden wounding.

I was wrong about Ben Graham’s mother. In my last post, I explored how she wounded him, impelling Ben to toughen his shell. That shell lessened the pain she and others caused him, but kept him remote from others. Now I see that I missed something important—something akin to what his mentee Warren Buffett later received from his own father. In this post, I discover her key motivating message that fueled Ben Graham’s spectacular rise on Wall Street.

Ben Graham’s mother, Dorothy Graham, née Gesundheit (1870-1944), influenced him more than anyone else. I want to like and admire my great-grandmother—even love her—but I can’t. I’ll tell you why and take you on my quest to understand Ben Graham’s relationship with his mother. I hope to appreciate my great-grandmother more as I uncover the tragedies and challenges she faced as a widowed mother of three.

Ben Graham reveals: “Of my father I remember very little indeed. This is more regrettable because he was, by all accounts, a marvelous person.” Then, he recounts others’ “enthusiastic praise” of his father: “he was handsome, vivacious, charming and nearly always in a high good humor. He was also an excellent business man, keen-witted, energetic, and unfailingly resourceful.” What aspects of his father’s character helped shape Ben Graham?

Shortly after my husband and I settled ourselves in the conference room at Berkshire Hathaway, Warren Buffett ambled through the door, dressed in a white mock turtleneck under a cornflower blue V-neck sweater. Belying the whiteness of his tousled hair, Mr. Buffett’s pale blue eyes shone with youthful eagerness as he remembered how my grandfather, Ben Graham, offered him a job in 1954.

I didn’t understand Ben Graham when I was a little girl and he was my “Grandpa Ben.” He was rich, so I thought his life was perfect. At age sixteen, I didn’t understand him when he took me on a cruise to the Black Sea; nor did I see him clearly the summer he welcomed me to his Aix-en-Provence cottage when I was twenty-one. I still didn’t fathom him in my forties…

The year was 1903. Benjamin Graham’s father Isaac had recently died at age thirty-five. Isaac’s once-thriving New York china shop was shuttered. Ben’s mother Dorothy had three sons to raise—eight-year-old Ben, nine-year-old Victor, and ten-year-old Leon—and no means of supporting them. How did she and the boys get by?

Benjamin Graham’s story began over a century ago, circa 1890, when his parents met and married in England. His mother Dorothy Graham, née Gesundheit, was born in 1870 into a Jewish merchant family in Warsaw, Poland. Her grandfather, Jacob Gesundheit, was a businessman and honored religious scholar who became chief rabbi of Warsaw in 1870…

This 1896 photographic portrait of Ben (age two) and his two older brothers hung in his home throughout his boyhood. Ben later expressed embarrassment at being “captured for posterity in short skirts.” This post reveals a blow Ben suffered which likely magnified his distress at seeing his younger self perpetually wearing girls’ clothes, while his brothers wore masculine attire.

Benjamin Graham taught hundreds of thousands of people how to invest in the stock market. He’s also my grandfather and he showed me how to invest in happiness. Beyond Ben Graham takes you beyond the “father of value investing” you already know.