Why did Graham believe most investors would ultimately become defensive investors?

Okay, that's an excellent question because it touches on one of the core ideas in Benjamin Graham's The Intelligent Investor. Graham was a deeply pragmatic man with profound insights into human nature and the market.

In my view, he believed that most people will (or should) end up as defensive investors, primarily for several very practical and down-to-earth reasons.

First, let's briefly define a "defensive investor."

Think of them as a "safe driver".

This driver doesn't speed, doesn't race others, and strictly follows the rules of the road. Their goal isn't to arrive first, but to arrive safely and without accidents.

In investing, a "defensive investor" is someone whose primary goal is to avoid significant losses and pursue long-term, steady, and "good enough" returns. They typically:

Diversify sufficiently: Don't put all their eggs in one basket; they buy a basket of quality stocks or funds.
Choose large companies: Prefer large, financially sound, well-established "blue-chip" companies.
Demand a "Margin of Safety": Buy at a price significantly lower than the company's intrinsic value – essentially getting a big discount, leaving ample room for error.
Don't try to predict the market: They don't guess whether the market will rise or fall tomorrow. Instead, they use a regular, mechanical investment approach, like dollar-cost averaging.

So, why did Graham think most of us end up becoming this kind of "safe driver"?

1. Time and Effort Commitment: Do You Really Have That Much Time?

Graham categorized investors into two types: Defensive and Enterprising.

The Enterprising Investor is like a professional Formula One driver. They need to invest enormous time and effort researching the track (companies), car performance (financial statements), competitors (industry analysis), and weather conditions (macroeconomic factors). This is almost a full-time job.
The Defensive Investor is like the ordinary car owner we described above.

Graham understood that most of us have demanding main careers, families to care for, TV series to binge, and games to play. We simply don't have the time to dive deep into tedious financial statements and industry reports like professionals.

Put simply, becoming a "stock market guru" comes at a huge cost. Most people neither have the time, nor are they willing to pay it.

2. Intellectual and Professional Capability: It's Not Just Interest, It's a Skill

Continuing the driving analogy, aspiring to be an F1 driver requires more than passion; you need top-tier driving skills, a deep understanding of vehicle mechanics, and exceptional physical conditioning.

Similarly, becoming a successful "Enterprising Investor" requires solid accounting knowledge, the ability to value businesses, and the skill to analyze competitive advantages. This goes beyond a mere "interest"; it's a professional skill.

Graham believed the vast majority of amateur investors lack this professional capability. If an ordinary person insists on mimicking the moves of the pros, they are less likely to "overtake on the curve" and more likely to veer off course.

3. Temperament and Emotional Control: The Toughest Hurdle

This might be the most crucial point.

Graham famously stated, "The investor's chief problem—and even his worst enemy—is likely to be himself. The investment success formula has nothing to do with IQ but everything to do with temperament."

Enterprising investing demands nerves of steel and absolute rationality. When the market crashes and everyone is panic selling, do you dare buy the fundamentally sound companies trading at fire-sale prices? When a hot stock is soaring and everyone around is making money, can you resist the temptation and stick to your principles, avoiding the chase? This kind of counterintuitive action requires exceptional psychological resilience.
Defensive investing, in contrast, is designed precisely to protect us from our own emotions. Its rules are simple and mechanical – for example, investing a fixed amount regularly regardless of market fluctuations. This approach minimizes the risk of making impulsive, disastrous decisions driven by greed or fear in the heat of the moment.

Graham recognized that most people cannot maintain absolute rationality when faced with the temptations and terrors of money. Therefore, a "clumsy" but consistent defensive strategy is far superior to a "brilliant" enterprising strategy that you simply cannot execute.

4. The Reality of Results: Pursuing "Aggressive" Results Often Leads to Worse Outcomes

Many people dream of making it big with investments, achieving returns far surpassing the market. But reality is harsh.

Graham observed that amateur investors who tried to play the "Enterprising Investor" often ended up with substantially worse results than those who simply remained "Defensive Investors." They typically:

Traded frequently, racking up hefty commissions.
Chased rising stocks and sold in panic during downturns (buying high, selling low).
Acted on rumors, buying various "junk stocks" without fundamental support. In the end, after all this flurry of activity, they might lose a significant portion of their principal.

Defensive investors, although seemingly "ordinary," achieve a "satisfactory" return by steadily participating in economic growth and corporate earnings through long-term perseverance. For achieving life goals like retirement or funding children's education, this "satisfactory" return is often perfectly sufficient.

To summarize

So, Graham's conclusion is profoundly realistic and wise:

He isn't saying we "can't" be Enterprising Investors. Rather, he argues that considering the enormous time commitment, demanding professional skills, extreme psychological hurdles, and the potentially painful cost of failure, this path is suitable only for a very small minority of exceptionally gifted individuals willing to dedicate themselves completely.

For the vast majority of ordinary people, acknowledging our limitations and choosing the safer, less stressful, lower-error-probability path of being a "Defensive Investor" is, in fact, the smartest and most rational choice. It allows us to reach the finish line steadily in the long race of investing, rather than crashing out midway due to various mishaps.