Which concepts from the book need to be adjusted or reinterpreted in today's context?

Alright, let’s discuss this topic. Benjamin Graham's The Intelligent Investor is absolutely the "Bible" of value investing. However, written decades ago, some aspects genuinely require us to examine them with a fresh perspective today.

Much like a classic film whose picture quality and pacing might not match modern blockbusters, its core story and emotional depth remain powerful. Reading this book is similar: we should absorb its "core philosophy," not rigidly adhere to every specific "tactical move."

Here are a few concepts I personally believe need adjustment and reinterpretation:

1. The Definition of a "Bargain" Needs Updating

• Graham's Classic Strategy: His most famous tactic was "cigar butt" or "Net-Net" investing. Simply put, seek companies whose market price is absurdly low—lower than their current assets minus all liabilities. Like picking up a discarded cigarette butt off the street; maybe a bit gross, but you get a free puff. This worked exceptionally well in an era of poor information flow, where good and bad companies often got indiscriminately crushed.

• Today's Reality: In the internet age, information travels too fast. If a company is truly that cheap, it's likely not overlooked by the market but has serious problems—a "value trap." You think you picked up a cigar butt, but it might be a firecracker about to explode.

• Modern Interpretation: Today, "cheap" more often means "cheap relative to its long-term intrinsic value," not just cheap on the balance sheet. Warren Buffett himself evolved his philosophy, moving from "buying average companies at a wonderful price" to "buying wonderful companies at a fair price." We need to focus significantly more on a company's business model, moat (competitive advantage), profitability, and future growth potential, not just its liquidation value.

2. The Understanding of "Assets" Needs Broadening

• Graham's Era: An industrial age where company value was predominantly in tangible "hard assets" you could see and touch—factories, equipment, inventory, land. These were plainly visible on the balance sheet.

• Today's Reality: We live in an information and technology age. What are the core assets of today's most valuable companies, like Apple, Google, or Microsoft? It's their brands, patented technology, user ecosystems, and vast data. These "intangible assets" are difficult to fully capture, sometimes impossible, on traditional accounting statements.

• Modern Interpretation: We can't just look at the Book Value to assess a company anymore. A software company's market cap might be dozens of times its net assets, but that doesn't necessarily mean it's overvalued. We need to understand how these intangibles create value and build barriers for the company. When assessing an app, you look at its monthly active users and network effects, not how many offices it has.

3. The "Stock-Bond Balancing" Strategy Needs More Flexibility

• Graham's Recommendation: He proposed a classic asset allocation rule: an investor's portfolio should maintain a dynamic ratio between stocks and bonds, ranging from 25% stocks/75% bonds to 75% stocks/25% bonds. Increase bond allocation during market euphoria and stock allocation during deep pessimism.

• Today's Reality:

  1. Vastly Expanded Investment Options: Back then, choices were limited to primarily stocks and bonds. Today, we have index funds (ETFs), real estate investment trusts (REITs), gold, even cryptocurrencies, and many other asset classes.
  2. Radical Interest Rate Shift: In Graham's era, bonds offered decent, stable yields. However, during the past decade-plus of ultra-low interest rates, bonds' appeal has significantly diminished. Holding large bond allocations might even lead to depreciation in real terms.

• Modern Interpretation: The principle of asset allocation remains fundamental, but the actual allocation strategy needs to be far more personalized and diversified. For the average person, a globally diversified portfolio incorporating various asset classes, tailored to their age, risk tolerance, and financial goals, is likely more effective than a simple two-part stock/bond split. Crucially, the advent of low-cost index funds (ETFs) allows ordinary investors to achieve high levels of diversification at minimal cost—unimaginable in Graham's time.

4. The Source of "Margin of Safety" Has Evolved

• Graham's Margin of Safety: Primarily derived from price—buying far below the company's intrinsic value (mostly calculable based on liquidation value). The larger the discount, the higher the margin of safety.

• Today's Reality: For a low-tangible-asset company like a tech firm or consumer brand, it's incredibly difficult to calculate a meaningful margin of safety purely based on liquidation value.

• Modern Interpretation: Today's margin of safety has multiple, more nuanced sources. Beyond just a price discount, it increasingly comes from:

  • Business Quality: Does the company have a strong moat? Think Moutai's brand or Tencent's social network. This inherent business strength provides significant error tolerance.
  • Predictability of Growth: The sustained growth of a company's future free cash flow is a crucial source of safety.
  • Superior Management: Management that consistently creates shareholder value is itself a form of safety net.

To summarize:

The most important takeaway from reading The Intelligent Investor isn't to copy its formulas verbatim, but to grasp the brilliant investment philosophy shining through:

• Mr. Market: The market is your servant, not your guide. Exploit its mood swings, don't let them dictate your actions. This is timeless!
• Margin of Safety: Always leave ample room for your own errors. This is timeless!
• Circle of Competence: Only invest within domains you genuinely understand. This is timeless!

Therefore, Benjamin Graham is like a great mentor who taught us to walk. We learned the core principles of standing upright and maintaining balance. But whether we choose to climb mountains, run marathons, or dance is up to us—requiring us to adjust our "stride" flexibly according to our own era and environment.