I learned stock analysis and financial accounting from an online nym called “Lundaluppen.” It was the early 2010s, blogging was all the rage, interest rates were crashing toward zero, and the central bank-fueled stock market was turning into the only game in town.
Lundaluppen publicly displayed his portfolio, with money figures and average purchase prices, and he wrote in-depth articles — sometimes thousands of words — on portfolio management and individual stocks that he owned or considered purchasing. He had transparent criteria, a set of objective financial metrics that he would assess companies against, and he would discuss his reasoning about investments (or current holdings) all in the open. The comment section was filled with thoughtful critiques and contributions, and readers like me could learn a ton about financial markets in many afternoons of delightful reading.
Only over time did I learn that his approach was called “fundamental analysis” and that it stemmed, via Warren Buffett, from an early-to-mid-20th century investor by the name of Benjamin Graham. Graham’s book, The Intelligent Investor, first written in 1949 and published in updated editions, contained everything a securities analyst would want, from how to read an annual report and assess the value of a business to create (and follow!) disciplined investment steps for oneself.
In 2024, the book celebrated 75 years in print and Jason Zweig, the Wall Street Journal journalist who has perhaps done most to bring Graham’s ideas to a wider audience — bar probably Buffett himself — has now published a new edition, with Graham’s original chapters printed alongside his own commentary and tidbits.
It’s a wonderful read, combining Graham’s age-old wisdom with Zweig’s blunt pen and modern anecdotes. His purpose, in addition to celebrating his intellectual hero, was also to “integrate Graham’s classic insights with today’s market realities.”
The entire approach stands in stark contrast to the tech-only, Magnificent 7, meme-stock, AI-noisy, and altogether gamified financial world we find ourselves in today; it’s a fresh, almost rose-tinted, reminder of what investment analysis would, could, and perhaps should be all about. On a personal note, it’s a wonderful throwback to my blissful early twenties when spending hours poring over various companies’ financial reporting and projecting their future earnings seemed like a good use of my time.
Graham’s original chapters are flowy, full of high prose and market commentary from a bygone age, with the least interesting portions being various corporate events or M&As for businesses that no longer exist. Zweig’s more balanced, modern, and easy chapters are a nice break, reading almost like his WSJ columns, and his repeated commentary in footnotes and stand-alone chapter commentary, offer additional insights into what Graham was getting at.
But I keep getting the sense that none of this really matters anymore. We’re in a new world now, dominated not by company performance or earnings projections, but macro news and liquidity flows. An ever-faster rising money tide raises all boats, with assets’ monetary premium running the show much more than which company is cash flow positive or whose stock trades at below working capital. (Screening for such criteria today, notes Zweig, produces a string of biotech and hopeful pharma companies, neither recommend themselves for investment to his average reader.)
There are indications scattered throughout the book that Graham, too, doubted his own framework. Looking at the mid-1960s stock market highs, Graham wrote that “old standards (of valuation) appear inapplicable, new standards have not yet been tested by time.” Graham frequently contrasted stock market valuations with available bond yields, implying at least that if interest rates across the board dropped to nothing, much higher multiples for an investor’s stockholders were permissible.
Putting them in practice hasn’t worked too well, either, Zweig informs us; James Rea, a research partner to Graham, made a fund in 1976 strictly following Grahamite criteria. Zweig sullenly notes that “the Rea-Graham fund earned robust gains for several years, then faded into obscurity. It seems to have faltered because it sold its winners too soon.”
The kicker comes at the very end of this hefty 600-page tome, when Graham confesses where he made most of his fortune: an investment that blew his rules and criteria to smithereens. In 1949, already a wealthy man from a long and successful career on Wall Street, he and his business partner were offered to buy 50 percent of the business that eventually became the insurance giant GEICO for a sum amounting to a fifth of their fund: “almost from the start the quotation appeared much too high in terms of the partners’ own investment standards,” Graham writes:
Ironically enough, the aggregate of profits accruing from this single investment decision far exceeded the sum of all the others realized through 20 years of wide-ranging operations in the partners’ specialized fields, involving much investigation, endless pondering, and countless individual decisions.
Thus, one lucky/shrewd investment “may count for more than a lifetime of journeyman efforts.”
When the time comes, no matter how reasonable your criteria or disciplined your investing approach, a legendary investor is made when he sets those aside to take advantage of a special something, often a private deal or a bargain insider price achieved during great financial distress — buying when there’s blood in the streets, as Baron Rothschild allegedly said.
Zweig is quick to include Buffett in this, knowing full well that most of the Oracle of Omaha’s fortune stems not from being a disciplined Grahamite investor (conservatively buying below intrinsic value and selling once shares got too frothy) but having the guts to sidestep the framework and letting one’s holdings run; or as is the case for Bank of America, acquiring a failing business in the height of the financial crises; or Apple stocks, his single best investment, which at one point accounted for almost half of Berkshire Hathaway’s publicly traded holdings.
A similar story concluded Lundaluppen’s saga. He even stopped blogging for a few years, since there was no point: Every asset was priced well outside any Grahamite criteria, even adjusting for zero interest rates. Month after month, his readers saw him pile on to his cash position — I recall that he was 30-40 percent liquid at times — echoing what’s going on with Buffett’s Berkshire Hathaway right now (which holds some $325 billion in cash out of a trillion-dollar balance sheet). The rest, Lundaluppen held in securities with roughly index-fund exposure which didn’t exactly impress anyone for their fundamental analysis.
Eventually, Lundaluppen took his funds and invested them in a family business that his platform and reputation had given him access to but which his readers could neither follow nor inspect or verify. Thus, Lundaluppen’s public blogging and investment story ended, beautifully and poetically, by walking the very same route as the father of fundamental analysis himself had once done.
Put differently, for all the talk about the importance of strict investment analysis over the years, it’s setting them aside for those generational investments (and letting those run) that truly made these individual investors rich.
Then again, like Graham does, you can argue that these select individuals earned their status and thus deserve their great fortune — pun very much intended. It still required that initial effort to have the means as well as the reputation to, at some point in the future, be approached:
“Behind the luck, or the crucial decision, there must usually exist a background of preparation and disciplined capacity. One needs to be sufficiently established and recognized so that these opportunities will knock at his particular door. One must have the means, the judgment, and the courage to take advantage of them.”
We can learn a lot from Graham’s timeless work, augmented by Zweig’s fitting commentary — most of it summed up by “do as I do, not as I say.” However much celebrated and cherished the investment approach that is fundamental analysis, we learn about some of its great limitations.