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Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.

Benjamin Graham

Buy not on optimism, but on arithmetic.
BENJAMIN GRAHAM

Intelligent Investing Optimism
It is no difficult trick to bring a great deal of energy, study, and native ability into Wall Street and to end up with losses instead of profits. These virtues, if channeled in the wrong directions, become indistinguishable from handicaps.
BENJAMIN GRAHAM

Energy Loss Wall
In security analysis the prime stress is laid upon protection against untoward events. We obtain this protection by insisting upon margins of safety, or values well in excess of the price paid.
BENJAMIN GRAHAM

Events Safety Stress
The stock market resembles a huge laundry in which institutions take in large blocks of each others washing … without rhyme or reason.
BENJAMIN GRAHAM

Block Investing Laundry
Always remember that market quotations are there for convenience, either to be taken advantage of or to be ignored.
BENJAMIN GRAHAM

Ignored Investing Taken
Nearly everyone interested in common stocks wants to be told by someone else what he thinks the market is going to do. The demand being there, it must be supplied.
BENJAMIN GRAHAM

Demand Thinking Want
Individuals who cannot master their emotions are ill-suited to profit from the investment process.
BENJAMIN GRAHAM

Emotion Investing Investment
To enjoy a reasonable chance for continued better than average results, the investor must follow policies which are (1) inherently sound and promising, and (2) not popular on Wall Street.
BENJAMIN GRAHAM

Average Sound Wall
By refusing to pay too much for an investment, you minimize the chances that your wealth will ever disappear or suddenly be destroyed.
BENJAMIN GRAHAM

Investing Pay Too Much
Intelligent investment is more a matter of mental approach than it is of technique. A sound mental approach toward stock fluctuations is the touchstone of all successful investment under present-day conditions.
BENJAMIN GRAHAM

Intelligent Successful Technique
The qualitative factors upon which most stress is laid are the nature of the business and the character of the management. These elements are exceedingly important, but they are also exceedingly difficult to deal with intelligently.
BENJAMIN GRAHAM

Character Important Stress
Experience teaches that the time to buy stocks is when their price is unduly depressed by temporary adversity. In other words, they should be bought on a bargain basis or not at all.
BENJAMIN GRAHAM

Adversity Should Teach
In other words, the market is not a weighing machine, on which the value of each issue is recorded by an exact and impersonal mechanism, in accordance with its specific qualities.
BENJAMIN GRAHAM

Choices Impersonal Issues Voting
Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it – even though others may hesitate or differ.
BENJAMIN GRAHAM

Conclusion Facts Judgment May Sound
Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble… to give way to hope, fear and greed.
BENJAMIN GRAHAM

Hope Money Time
Undervaluations caused by neglect or prejudice may persist for an inconveniently long time, and the same applies to inflated prices caused by over-enthusiasm or artificial stimulants.
BENJAMIN GRAHAM

Enthusiasm Long May Prejudice Time

Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.

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Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.

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