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A widely known economist and professional investor, Benjamin Graham was the first proponent of value investing which he began teaching at Columbia Business School in 1928. He made a fundamental distinction between investment and speculation arguing that in the short term the stock market behaves like a voting machine but in the long term it acts like a weighing machine (i.e. its true value will in the long run be reflected in its stock price). Graham distinguishes between the passive investor (defensive investor, cautious investing, looking for value stocks, buying for the long term) and the active investor (has more time, interest and probably specialized knowledge to seek out exceptional buys in the market). Graham recommends that investors spend time and effort to analyze the financial state of companies - when a company is available on the market at a price lower than its intrinsic value, then a margin of safety exists which makes it more suitable for investment.

Warren Buffett speaks fondly of Graham who was his professor at Columbia and later an employer and a friend. Buffett describes Graham as the second most influential person in his life, after his own father. It was Ben’s ideas that sent Buffett down the right path and he would be a different person today if he hadn’t picked up Graham’s book The Intelligent Investor back in 1949 when Buffett was 19. Buffett continues to describe him not only as having brilliant ideas about investing but also as being a generous man whose name he gave to his son. Graham was born smart and he didn’t have a choice but to be an intelligent human being. However, he could’ve behaved in an arrogant manner or had total superiority but instead he chose to be a wonderful human being even though he knew he was smarter than 99.99% of the people around him. It didn’t bother him sharing knowledge with his students that in affect was going to make them his competitors.