I think the term analyst (as used by Graham) means someone who analyzes the stock market professionally. I did not see a rationale for bifrucating analysts into two groups: those who invest in their own area of expertise (your ‘trained investors’) and those who did not (which I think is a very small subset of all analysts). It just seemed wierd that Graham would use the broad term ‘analyst’ to define such a narrow group…

In any case, I feel the reason Graham had little confidence in the ability of any analyst to pick stocks is that those who have actual stock-picking skill (as opposed to luck) are rare and even more difficult to identify beforehand. It seems your analysis doesn’t utilize the same assumption…as any analyst can beat the market with superior stock picking skill so long as they invest their own money.

“It’s the difference between involvement and commitment: the analyst is involved in the decision making process … the trained investor (investing his OWN money, perhaps as well as those of others) is committed.”

No offense, but I’m not sold yet.

I think an analyst investing in their own selections is merely indicative of the analyst’s own confidence-level in those selections, not whether those selections are actually superior. Put differently, just because someone has confidence their picks are superior, doesn’t mean they are right.

I also have a problem with your distinction between ‘analyst’ v. ‘trained investor’, as you are assuming Graham’s term ‘analyst’ means those who are trained in stock/company evaluation, but do not invest their own money (or others money) in the investments that they know the most about. That just doesn’t seem right to me.

It’s the difference between involvement and commitment: the analyst is involved in the decision making process … the trained investor (investing his OWN money, perhaps as well as those of others) is committed.

If you don’t understand the difference, next time you sit down to a hot bacon and egg breakfast think of the chicken who was involved and the pig who was committed

… then dedicated his life to teaching others (and, practising what he preached) how to select common stocks that will give better than average results.

The trick is that you need to become a trained investor to do so …”

Interesting distinction…I guess the one question I have is what stock selection knowledge/skill does a ‘trained investor’ possess that an analyst does not? In other words, if there truely is a difference between the two, what secret does the ‘trained investor’ hold that analysts have been incapable of obtaining?