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Most investors think the answer lies in growth. Or stock picking. Or timing. Or finding the next great company before everyone else.

There are countless ways to invest, but only one way to stack the odds in your favour: pay less than something is worth.

If you want to understand value investing, you have to start with Benjamin Graham.

Graham is widely seen as the father of value investing. Through his classic books Security Analysis and The Intelligent Investor, he changed the way people thought about stocks. Before Graham, investing was often driven by hunches, rumours, and instinct. He brought logic and discipline to the front line.

His ideas were not just theoretical. Graham ran money himself, and his fund beat the market by around 3% a year over two decades, a result most investors never come close to achieving.

But his real legacy may be what he passed on to others.

He taught for decades at Columbia University and the New York Institute of Finance, shaping a generation of investors. His most famous student was Warren Buffett, who went on to become the richest man in the world by applying the principles he learned in Graham’s classroom.

The world has changed a lot since Graham’s teaching days. But those principles are still relevant today, and some investors (including us) use them every day to outperform the markets time and time again.

Benjamin Graham understood something most people still struggle with today: a stock’s price is not the same as its value.

The price is simply what someone is willing to pay today. Value is what the business is actually worth over time.

And those two things can drift very far apart.

Why? Because prices are set by people. And people are emotional. They get excited, greedy, fearful, impatient, and irrational. Businesses, on the other hand, do not usually change nearly as fast as their stock prices do.

That is why a stock can fall 50% in a year even when the business itself is still largely the same.

Graham pointed this out back in 1938 when he wrote about General Electric. Its share price had collapsed, but the business had not suddenly lost half its worth. What had really changed was investor mood. People were optimistic before, then pessimistic after. The business was still the business. The crowd had simply changed its mind.

That idea became one of Graham’s most famous teachings: Mr. Market.

Mr. Market is an imaginary business partner who shows up at your door every day offering to buy your shares or sell you more. Some days he is depressed and offers you a ridiculously low price. Other days he is euphoric and offers you an absurdly high one.

Your job is not to believe him. Your job is to use him. The best investors understand this. They do not let the market’s mood control them. They let the market’s mood create opportunities.

If Mr. Market changes his mind every day, you cannot rely on his price to tell you what a business is worth. You need to make your own opinion, and that’s where value investing comes in.

The problem, of course, is that no one can predict the future with precision. And since the value of a business depends on the cash it will produce over time, it is impossible to know its exact worth.

But here is the good news: you do not need to be exact to invest well.

That is one of Graham’s most useful ideas. In investing, precision can be comforting, but it is often misleading. A detailed spreadsheet can make an estimate look scientific without making it true.

Graham’s point was simple: in many cases, approximation is enough. You do not need to know the precise value of a business to recognise when the market is being far too pessimistic or far too optimistic.

To compensate for this approximation, Graham also encouraged his students to use a margin of safety. In other words, to leave enough room for error in case your estimate turns out to be wrong. The bigger the uncertainty, the bigger the discount you should demand.

Those two ideas alone helped Warren Buffett, Graham’s other students, and generations of The Intelligent Investor readers become better investors. They changed the way people thought about stocks and made investing far more disciplined and thoughtful.

But some of Graham’s best lessons came from the moments when things didn’t go as planned.

In 1929, Graham learned a brutal lesson: even a well-implemented margin of safety can’t save you when Mr. Market loses his rationality.

After the market suffered a ferocious crash, Graham believed the worst was over. In 1930, he doubled down. He bought more stocks that looked cheap on paper and even borrowed money to do it, convinced the opportunity was too good to ignore.

He was early. Very early.

The market kept falling. Stocks dropped another 33% in 1930, 52% in 1931, and 23% in 1932. Graham was crushed. Over four years, he lost around 70% of his personal wealth.

The lesson? Cheap stocks can always get cheaper.

A stock that falls from $20 to $10 looks cheap. At $5, it can look like the bargain of a lifetime. If it then falls to $1, that’s another 90% loss.

This is where many investors get trapped. They confuse a low price, or an undemanding valuation, with a safe opportunity. But low multiples often tell you very little on their own, especially when the business lacks quality.

That is one of the core beliefs behind RatedA. Our system was built to filter out the value traps and highlight the rare cases where quality and valuation meet.

Graham was right that, over time, price and value often reconnect. But “over time” can be painfully long. Long enough to test your patience, your conviction, and in some cases, your survival.

Valuation matters, but valuation alone is not enough.

The market can price one stock at 5 times earnings and another at 50 times earnings. That does not mean the cheap one will suddenly rerate, or that the expensive one will quickly come back down to earth. The market does not owe you a return just because your spreadsheet says the stock is undervalued.

You are free to decide what a stock is worth. The market is free to ignore you.

And that is the real point: there are no rules in the stock market.

The RatedA Portfolio is beating the market. You could too.

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