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 GRAHAMNever buy a stock because it has gone up or sell one because it has gone down.
More Benjamin Graham Quotes
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Real investment risk is measured not by the percent that a stock may decline in price in relation to the general market in a given period, but by the danger of a loss of quality and earnings power through economic changes or deterioration in management.
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Speculators often prosper through ignorance; it is a cliché that in a roaring bull market knowledge is superfluous and experience is a handicap. But the typical experience of the speculator is one of temporary profit and ultimate loss
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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.
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Before you place your financial future in the hands of an adviser, it’s imperative that you find someone who not only makes you comfortable but whose honesty is beyond reproach.
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Although there are good and bad companies, there is no such thing as a good stock; there are only good stock prices, which come and go.
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Always buy your straw hats in the Winter
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It’s nonsensical to derive a price/earnings ratio by dividing the known current price by unknown future earnings.
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Diversification is an established tenet of conservative investment.
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Thousands of people have tried, and the evidence is clear: The more you trade, the less you keep.
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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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Before you invest, you must ensure that you have realistically assessed your probability of being right and how you will react to the consequences of being wrong.
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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.
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The volume of credit depends upon three factors: the desire to borrow, the ability to lend and the desire to lend.
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When somebody asserts that a stock has an earning power of so much, I am sure that the person who hears him doesn’t know what he means, and there is a good chance that the man who uses it doesn’t know what it means.
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The market is always making mountains out of molehills and exaggerating ordinary vicissitudes into major setbacks.
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In an ideal world, the intelligent investor would hold stocks only when they are cheap and sell them when they become overpriced, then duck into the bunker of bonds and cash until stocks again become cheap enough to buy.
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Do not let anyone else run your business
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The world has not learned the technique of balanced expansion without the resultant commercial and financial congestion.
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No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. Only by insisting on what Graham called the “margin of safety” – never overpaying, no matter how exciting an investment seems to be – can you minimize your odds of error.
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It is worth pointing out that assuredly not more than one person out of a hundred who stayed in the market after after 1925 emerged from it with a net profit and that the speculative losses taken were appalling.
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It is absurd to think that the general public can ever make money out of market forecasts.
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The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.
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The intelligent investor is likely to need considerable will power to keep from following the crowd.
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It should be remembered that a decline of 50% fully offsets a preceding advance of 100%.
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In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand.
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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