Most businesses change in character and quality over the years, sometimes for the better, perhaps more often for the worse. The investor need not watch his companies’ performance like a hawk; but he should give it a good, hard look from time to time.
BENJAMIN GRAHAMNothing important on Wall Street can be counted on to occur exactly in the same way as it happened before.
More Benjamin Graham Quotes
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To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.
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High valuations entail high risks.
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Whether we like it or not, government intervention in the face of surplus is here to stay.
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Buy not on optimism, but on arithmetic.
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Calculate a stock’s price/earnings ratio yourself, using Graham’s formula of current price divided by average earnings over the past three years.
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The story of Joseph in Egypt and of the seven fat and the seven lean years has passed into the homely wisdom of the ages; but our economic thinking seems to have lost contact with so simple and basic approach to prudent management of a nations welfare.
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It should be remembered that a decline of 50% fully offsets a preceding advance of 100%.
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Buy when most people, including experts, are pessimistic, and sell when they are actively optimistic.
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Always buy your straw hats in the Winter
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Even the most conservative must realize that the recent transformation of surplus from an individual to a national disaster implies a scathing indictment of our capitalist system as it has now developed.
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Instead of passing blithely over into that Promised Land, flowing almost literally with milk and honey, it may be our destiny to wander a full 40 years or more in the wilderness of doubt and divided sentiments.
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To see how much a company is truly earning on the capital it deploys in its businesses, look beyond EPS to Return on Invested Capital (ROIC).
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The investor’s chief problem – and even his worst enemy – is likely to be himself.
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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.
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Diversification is an established tenet of conservative investment.
BENJAMIN GRAHAM