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A great company is not a great investment if you pay too much for the stock.

Benjamin Graham

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 ideal form of common stock analysis leads to a valuation of the issue which can be compared with the current price to determine whether or not the security is an attractive purchase.
BENJAMIN GRAHAM

Analysis Determine Investing Issues Valuation
High valuations entail high risks.
BENJAMIN GRAHAM

Investing Risk Valuation
Confusing speculation with investment is always a mistake.
BENJAMIN GRAHAM

Confusing Investing Mistakes
For 99 issues out of 100 we could say that at some price they are cheap enough to buy and at some price they would be so dear that they would be sold.
BENJAMIN GRAHAM

Investing Issue Issues Price Some
In the short-run, the market is a voting machine – reflecting a voter-registration test that requires only money, not intelligence or emotional stability – but in the long- run, the market is a weighing machine.
BENJAMIN GRAHAM

Emotional Long Running
The value of the security analyst to the investor depends largely on the investor’s own attitude. If the investor asks the analyst the right questions, he is likely to get the right or at least valuable answers.
BENJAMIN GRAHAM

Analysts Answers Attitude
In the old legend the wise men finally boiled down the history of mortal affairs into a single phrase: ‘This too will pass.’
BENJAMIN GRAHAM

Men Phrases Wise
Thus the important and difficult part of sound investment, which hinges upon the investor’s own temperament and attitude, is not much affected by the passing years.
BENJAMIN GRAHAM

Affected Investment Passing Temperament Years
A speculator gambles that a stock will go up in price because somebody else will pay even more for it.
BENJAMIN GRAHAM

Investing Pay Speculators
The essence of investment management is the management of risks, not the management of returns.
BENJAMIN GRAHAM

Essence Investing Risk
Unusually rapid growth cannot keep up forever; when a company has already registered a brilliant expansion, its very increase in size makes a repetition of its achievement more difficult.
BENJAMIN GRAHAM

Achievement Forever Growth
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
Calculate a stock’s price/earnings ratio yourself, using Graham’s formula of current price divided by average earnings over the past three years.
BENJAMIN GRAHAM

Average Current Past Price Years
The intelligent investor is likely to need considerable will power to keep from following the crowd.
BENJAMIN GRAHAM

Crowd Following Intelligent Needs
If General Motors is worth $60 a share to an investor it must be because the full common-stock ownership of this gigantic enterprise as a whole is worth 43 million (shares) times $60, or no less than $2,600 million.
BENJAMIN GRAHAM

Common Ownership Share

A great company is not a great investment if you pay too much for the stock.

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A great company is not a great investment if you pay too much for the stock.

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