Benjamin Graham: Warren Buffett's Teacher and the Margin of Safety

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Benjamin Graham held patents for calculators, wrote Broadway plays, spoke seven languages, and translated Uruguayan novels for pleasure. He also wrote the rule book on valuing companies and taught Warren Buffett. This episode connects the two halves of the man through one event: born Benjamin Grossbaum in London in 1894 and raised in New York, he lost his father young and watched the panic of 1907 push his family into poverty. He spent the rest of his life seeking security that could be measured.

Graduating from Columbia at 20 with faculty offers in math, English, and philosophy, he chose Wall Street to support his mother and brought academic rigor to a market run on rumor. The episode recounts his proxy fight at Northern Pipeline, the books Security Analysis and The Intelligent Investor, the distinction between investing and speculating, and the parable of Mr. Market. It also examines the irony that his biggest win, GEICO, broke his own rules.

Graham found that Northern Pipeline, trading near $65 a share, held railroad bonds worth over $90 a share, and he rallied shareholders to force a payout.
His net current asset method ignored factories and real estate entirely and bought only when a stock sold for two thirds or less of liquid assets minus all liabilities.
From 1936 to 1956 his operation returned roughly 20 percent a year against about 12.2 percent for the broader market.
His firm bought half of GEICO in 1948 for around $712,000, and regulators forced the shares to be distributed to partners, who saw extraordinary gains.
He proposed a currency backed by a basket of commodities and aimed to do something foolish, something creative, and something generous every day.

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