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1. Defensive Investor: Graham introduces the concept of the defensive
investor, who prefers a passive approach to investing.
2. Diversification: Diversifying investments across various asset classes
reduces risk, and Graham recommends a maximum allocation of 75% to stocks and 25% to bonds.
3. Large-Cap Stocks: Defensive investors should focus on large-cap stocks
of established companies with a history of stability.
4. Regular Contributions: Regularly adding to investments helps build wealth
steadily over time.
5. A Margin of Safety: Even for defensive investors, seeking a margin of
safety by buying stocks below their intrinsic value remains a crucial principle.
Chapter 5: The Defensive Investor and Common Stocks
1. Common Stocks for Defensive
Investors: Graham suggests that
defensive investors should hold a mix of common stocks and bonds, with an emphasis on the
former.
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