Good morning.

Yesterday would have been Benjamin Graham's 128th birthday. Born in London on May 9, 1894, Graham founded the disciplines of security analysis and value investing, was Warren Buffett's mentor and wrote the classic book after which this newsletter is named.

Graham knew hardship. His father died when Ben was only eight years old, and the family business -- importing porcelain and decorative objects -- fell apart. His mother's brokerage account was wiped out in the Panic of 1907. Graham never forgot being sent to the bank as a boy and hearing the teller ask whether his mother was "good for five dollars."

Then, in and after the Crash of 1929, Graham's investment partnerships were almost wiped out. He went on to build one of the greatest investing track records of the 20th century, but he never forgot the lessons of loss:

• Don't invest using borrowed money.
• Never pay too much for the prospect of future profits.
• Never count on greater fools to bail you out of reckless risks.
• Above all, your results depend much less on how markets behave than on how you behave.

As fear fills the air and financial markets around the world continue to totter, do yourself a favor and read -- or reread -- what I consider the most important paragraph about investing Graham ever wrote. It may, in fact, be the most important paragraph about investing anyone has ever written:

In recent years, investors have been led to believe that their greatest asset is the ability to trade at will for free.

Graham says: No way. 

Your basic advantage as an investor, explains Graham, is that you don't have to trade because everybody else is. When everybody is selling, that's their problem; it doesn't have to be yours.

When the market's behavior doesn't make sense to you, you don't have to join in. You can marvel at what is going on, but you don't have to follow the flock.

It's one thing to sell because you have an immediate and pressing need for cash.

But if you sell just because other people are selling, you make yourself hostage to the whims of tens of millions of strangers who often go collectively crazy. That's no way to live, and it's no way to invest.

Happy birthday, Ben. If you were around today, I know you would be building a watchlist of investments to buy if they get even cheaper.

Questions about I bonds, the virtually risk-free inflation-protected savings bonds that are yielding 9.62%, keep rolling in.

Michael Turner and Keith Johnson ask: Can businesses, corporations or partnerships buy I bonds?

Yes.

A business entity can buy electronic I bonds in amounts up to the same $10,000 annual limit as individuals can. (More details are here.)

Robert Trout, Tom Walsh and Steve Martin (among others) ask: Can I set up a revocable trust to buy an additional $10,000 annually in I bonds?

Yes.

"It doesn’t matter whether it is revocable or irrevocable," says Douglas Dachille, former chief investment officer of American International Group Inc. (and a fan of I bonds). As long as each trust meets the requirements, including a separate governing trust document and a bank account titled in its own name, it can purchase electronic I bonds up to the $10,000 annual limit.

"It isn’t even necessary to have a trust Employer Identification Number, although that is my personal preference," Mr. Dachille says. "Many revocable trusts don’t apply for an EIN and instead use the Social Security number of the grantor." (More details are here.) 

However, finance professor and retirement consultant Zvi Bodie, a huge booster of I bonds, is getting worried they're getting too popular:

Some people are looking for ways to circumvent the $10,000 annual purchase limit. One way is by establishing trust accounts. I view this as a dangerous loophole which the government should close immediately before it leads to abolition of the entire I bond program.... I bonds were created to provide a safe investment for the middle class. Under current circumstances it’s the most costly component of the national debt when viewed from the perspective of the U.S. Treasury. Allowing [larger] purchases will benefit primarily the wealthy and will likely lead to termination of the entire program. That’s what happened years ago in the U.K.

Reader Jim Garrett personifies what Zvi Bodie is worried about. He is piling up I bonds by the bushelful:

I invested $90k in 2021 in I bonds and will put another $90k in I bonds for 2022:
$10k in my wife's SS#
$10k in my SS#
$10k in a revocable living trust, my wife is grantor (cost me $40 to set this up [online] and paid my attorney $200 to review it), used wife's SS# for the trust
$10k established a revocable living trust, I am the grantor (just changed the name on above, zero additional cost)
$10k in an LLC that I own 100% and has a separate IRS EIN....these cost nothing to set up.
$10k in an LLC that my wife owns 100% and has a separate IRS EIN
$10k in adult child name A (they are not informed of this by Treasury and I don't tell them); it is a gift recorded as such with Treasury...use child SS#
$10k in adult child name B...use their SS#
$10k in adult child name C...use their SS#
$90k/yr total

If inflation continues to run rampant, I will continue with this....effectively taking this out of bond investments that will get killed with rising interest rates....and serves as emergency cash.

Well, get 'em while you can.

With markets tumbling, what have you been doing to keep calm and maintain a long-term perspective?

To share your thoughts, just reply to this email. Responses may be lightly edited for brevity or clarity. Please remember to include your name and city.

Be well and invest well,

Jason

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Price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market....
—Benjamin Graham