Brian Lee
Jul 09, 2025
The Intelligent Investor is undoubtedly the classic text for long-term investors. I believe that having a longer time horizon is essential not only for growing assets but also for maintaining peace of mind. Graham’s metaphor of “Mr. Market” helped me understand my own psychology and behavior in trading.
Most people treat the stock market like a casino. They fear losses, sell in panic, and buy with hope.
I engage in speculative hedging through covered calls, which have been my most profitable trades. However, many traders have never read The Intelligent Investor. Until you read that book cover to cover, I strongly advise against trading any stocks or options. The book addresses the psychological challenges of investing. While its examples may be dated, the revised editions include modern and relevant commentary.
You MUST stop worrying about market fluctuations—and you MUST learn how to capitalize on them. Warren Buffett famously recommends holding assets “forever” and ignoring the news. Yet if you study his moves carefully, you’ll see he does sell occasionally—to realize profits or offset capital gains—but he does so deliberately, not reactively.
Once you buy an asset, consider that money gone. Your only concern should be whether the asset generates income. The reason an asset has resale value is because of its expected future income, which is how business valuation works: annual income multiplied by a valuation multiple.
If you believe your net worth rises and falls with the market, you will lose sleep. Don’t fool yourself into thinking cash is safe—it depreciates constantly. It’s just paper.
“Buying the dip” can work, but it must be done carefully and strategically. At times, it’s wise not to add exposure to underperforming assets.
Covered calls become especially profitable during market dips. However, this form of hedging only becomes effective after thoroughly understanding the mindset described in The Intelligent Investor. You can only profit from other traders’ fear and panic if you fully understand their emotional patterns.
Like all speculative hedging, covered calls involve risk—and often, debt. If you want the returns I see, you MUST learn to use debt wisely. You can take a conservative approach, but your profits will be limited. Risk is profit.
Is the risk worth it? That’s your decision.
I’ve decided it is.