Modifications in the latest edition of the classical Value Investing text by Benjamin Graham — Warren Buffett's mentor — have caused considerable confusion.
The two versions of The Intelligent Investor currently in print are:
- The 1973 edition modified in 2006 with Jason Zweig's commentary.
- A less common 1949 edition reprinted in 2005, with a Foreword by John Bogle.
1. The 2006 Edition
To begin with, the commentary by Jason Zweig in the 2006 edition of The Intelligent Investor — and the resulting modifications of Graham's text — have made the book considerably harder to read.
A quick visual comparison of Graham's final 1973 edition, against the modified 2006 one, amply demonstrates the reduced readability of the latter.
- The book is now nearly twice as lengthy, and quite unnecessarily so; as explained below.
- The chapter list is almost unreadable due to the commentary list, which is all in capital letters.
- All of Graham's footnotes have been moved to the end of the book, making them nearly impossible to refer to.
This is all especially troublesome considering that the book is addressing a tough subject to begin with.
As can be seen from the scans below, the 1973 chapter list is far easier to read; despite being from an older book and listing more chapters per page.
The change in structure of Graham's original text has also caused considerable misinterpretation of Graham's principles, as described in Understanding The Benjamin Graham Formula Correctly.
Graham is also frequently misquoted today, often owing to these same modifications to his text.
The argument made for this debasement of what was a classical work — and perhaps the most important book ever written — on finance, is that it needed to be made contemporarily relevant.
But Graham himself included all information required to modernize his framework using current interest rates, as well as preceding inflation rates.
When one also factors in the poor opinion of theorists that Buffett and other notable Value Investors have expressed in matters of practical application of investment principles, this update was perhaps nothing more than a marketing gimmick.
2. The 2005 Reprint
The Foreword by John Bogle in this reprint is definitely valuable, but this 1949 edition is obsolete even by Graham's standards.
Graham's acknowledgement to Buffett — that Bogle alludes to in his Foreword here — is missing from the above 2006 edition as well.
"The basic principles of intelligent investing that [Graham] set forth... have remained virtually intact and unassailable."
The last version written by Graham himself is the Fourth Revised Edition from 1973. This edition was reprinted in 1986 with a Preface by Warren Buffett, and with the transcript of Buffett's 1984 talk The Superinvestors of Graham-and-Doddsville as an appendix.
GrahamValue's recommendation is to use this particular reprint, which was used for the scan above as well. It includes Buffett's valuable inputs, but without disturbing Graham's text.
This 1986 reprint does not seem to currently be in print, but is available on Amazon (non-referral link).
Note: Buffett too has recommended an earlier edition of Security Analysis for nearly identical reasons.
In his 1986 Preface to the reprint of the Fourth Revised Edition from 1973, Buffett wrote:
"I read the first edition of this book early in 1950, when I was nineteen. I thought then that it was by far the best book about investing ever written. I still think it is."
At the Berkshire Hathaway 2018 Annual Shareholders Meeting, Warren Buffett said that he would rather hire someone who truly understands The Intelligent Investor over a top business school graduate.