📖Benjamin Graham

Defensive Investor Strategy

🌱 Beginner★★★★★

Defensive investors should only hold shares of large, established companies with proven long-term profitability records.

💬

The defensive investor must confine himself to the shares of important companies with a long record of profitable operations.

— _The Intelligent Investor_，1949

🏠 Everyday Analogy

Just like choosing a time-honored restaurant for a meal—it may not be the cheapest option, but decades of reputation and stable operations ensure you don’t have to worry about food safety, giving you peace of mind. Defensive investing means selecting industry-leading companies with long-standing operations and stable performance.

📖 Core Interpretation

Defensive investors should only invest in major companies with a long-term record of profitability.
💎 Key Insight：This is Graham's first filter for the defensive portfolio. Large, profitable companies with long operating histories are less likely to fail outright and more likely to recover from setbacks. By excluding speculative and unproven businesses, you eliminate the most common sources of permanent capital loss.

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❓ Why It Matters

Safety first, avoid complex analysis, suitable for most investors.

🎯 How to Practice

Choose well-established, reputable companies, diversify your investments, and hold for the long term.

🎙️ Master's Voice

The defensive investor must confine himself to the shares of important companies with a long record of profitable operations.
Graham advised defensive investors to stick with proven, large companies. Safety came from track records, not speculation.

⚔️ Practical Guide

✅ Decision Checklist

  • Is this a proven company?
  • Is there a long profitable record?
  • Am I being appropriately defensive?

📋 Action Steps

  1. Focus on established companies
  2. Require long track records
  3. Avoid unproven stories

🚨 Warning Signs

  • Speculative investments
  • No track record
  • Unproven companies

⚠️ Common Pitfalls

✕May miss out on high-growth opportunities.
✕but the risk is also lower.

📚 Case Studies

1
Dot-Com Bubble Caution (2000)
Graham-style defensive investor avoids overpriced tech IPOs and holds diversified blue-chip stocks while market soars irrationally.
✨ Outcome：Portfolio declines far less in 2000–2002 crash and recovers steadily through dividends and moderate appreciation.
2
Financial Crisis Discipline (2008)
Investor holds high-quality, dividend-paying value stocks and investment-grade bonds through the global financial crisis.
✨ Outcome：Suffers drawdown but avoids forced selling, continues reinvesting dividends, and fully recovers within several years with less volatility than market.

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