Warren Buffett learned everything he knows from this legend

Warren Buffet is famous for popularizing and getting rich from value investing.

Although the legendary investor amassed his $145 billion fortune through this method, there’s one key person he has to thank: Benjamin Graham.

Graham — who is regarded as the “father of value investing” — developed the investing principle when he was working as an adjunct finance professor at Columbia Business School in the 1920s, according to the university .

He came up with the method with David Dodd, another finance professor at the school. They are considered the pioneers of the field, the university said, although Graham is awarded with the grand title.

Graham and Dodd’s value investing methodology was a way to “identify and buy securities priced well below their true value” for an “outside minority shareholder in public stocks,” Columbia said. Their security analysis principle gave a “rational basis for investment decisions,” it added.

The two started teaching their methodology at Columbia’s Business School in 1928 — more than 20 years before Buffett became his student.

Graham is known for authoring two of the most revered investing books. He co-authored Security Analysis in 1934 with Dodd, which was the first book to “put the study of investments on a systematically logical footing,” according to Wall Street Journal columnist Jason Zweig , who also edited a revised edition of one of Graham’s books.

Zweig said Graham is also “universally acknowledged” as the “father of modern security analysis.”

“Students of Security Analysis recognized that the masterpiece did not spring into life in one outburst of genius. Rather it was the result of much hard work and the experience of two decades before the first edition,” said a 1977 paper co-authored by a former student and assistant to Graham.

This book was referred to as the “Bible of Graham and Dodd.”

More than a decade later in 1949, Graham published his book The Intelligent Investor. Buffett has previously called the book “timeless,” saying the lessons are “simple” but “powerful.”

“In my early days I, too, rejoiced when the market rose. Then I read Chapter Eight of Ben Graham’s The Intelligent Investor, the chapter dealing with how investors should view fluctuations in stock prices. Immediately the scales fell from my eyes, and low prices became my friend. Picking up that book was one of the luckiest moments in my life,” Buffett said in a 2011 letter to shareholders.

“The extraordinary thing about the securities market, if you judge it over a long period of years, is the fact that it does not go off on tangents permanently, but it remains in continuous orbit,” Graham said during a lecture series at the New York Institute of Finance in the 1940s. “When I say that it doesn’t go off on tangents, I mean the simple point that after the stock market goes up a great deal it not only comes down a great deal but it comes down to levels to which we had previously been accustomed.”

“The correct attitude of the security analyst toward the stock market might well be that of a man toward his wife. He shouldn’t pay too much attention to what the lady says, but he can’t afford to ignore it entirely,” he said during the lecture. “That is pretty much the position that most of us find ourselves vis-à-vis the stock market.

According to the 1977 paper, Graham was born in 1894 in London before moving to New York where his father opened up an American branch of his firm that imported goods from Austria and Germany.

He graduated second in his class at Columbia in 1914. Although he had three offers to teach at the university — in philosophy, mathematics, and English — Graham instead decided to work on Wall Street, although he had no background in economics at the time.

After decades working on the Street, in 1936, Graham officially created his firm Graham-Newman Corporation.

“In 1948, we made our GEICO investment and from then on, we seemed to be very brilliant people,” Graham said in an interview from the year he died.

In 1928, Graham began teaching as a lecturer at Columbia’s Business School during the evening. Dodd, who was a faculty member already, would attend Graham’s class, the paper said. Graham retired from Columbia in 1965.

“His speed of thought was so great that most people were puzzled at how he could resolve a complicated question directly after having heard it,” Irving Kahn, Graham’s former student and assistant, said in a paper titled “Some Reflections on Ben Graham’s Personality.”

During his life, Graham wrote a Broadway play called “Baby Pompadour.” It came out the same year his first book was published, yet was not nearly as successful with only four performances.

A New York Times critic at the time said, “Mr. Graham had better stick to one thing or the other—or find himself a new hobby.”

The investing pioneer passed away in 1976 in France.

Buffett was first introduced to Graham as his student at Columbia’s Business School in 1951.

“I went there because Ben Graham taught there,” Buffett said during a sit-down with Columbia Business School’s dean Glenn Hubbard in 2015 for the school’s centennial.

After Buffett graduated from the business school, he worked at Graham’s firm. But once Graham retired, Buffett started his own business, Columbia said.

While working under Graham, Buffett said his teacher-turned-boss trusted him to “just go buy” securities Buffett was interested in.

Buffett said “making money did not motivate” Graham, recalling a time when the two were on their way to eat when the mentor told Buffett “don’t worry too much about making money,” adding “it won’t change the way you live.”

The Berkshire Hathaway chairman has lived by this message. He is known for his more low-key lifestyle compared to his fellow billionaires, and has committed to donating 99% of his wealth.

Buffett has said that aside from his own father, Graham was the most influential person in his life, the school said.

“I think his advice is timeless,” Buffett said in the interview, adding that in regards to Graham’s second book, “I haven’t heard anything better since I got out.”

“Graham laid out the philosophies so well, so simply, so powerfully, that what I learned at 19 or 20 from him, I’ve applied it ever since,” he said.

“We had learned from Ben Graham that the key to successful investing was the purchase of shares in good businesses when market prices were at a large discount from underlying business values,” Buffett said in a 1985 shareholder letter .

Buffett referred to Graham as a “wonderful friend” and even named his first son after the mentor (and his father).

While Buffett built much of his career based on Graham’s investing philosophy, he made some tweaks along the way.

Buffett said in an interview with Columbia Business School from 2014 that Graham was much more of a passive investor and would go for “a little of everything,” which Buffett said made him “widely diversified” — a style he said he would not go for.

“He felt we ought to achieve our results in a way similar to what somebody who read [his] book could achieve them and that we might be cheating a little if we worked a lot harder than that,” Buffett said.

He added that Graham didn’t want them to go out and talk with management about their businesses because people who read his books wouldn’t have the same opportunity. Buffett said this was “more passive” and “slower” than he would’ve liked, while acknowledging that he was in his early 20s at the time and was “eager for more.”