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 GRAHAMTo 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.
More Benjamin Graham Quotes
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Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.
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The essence of investment management is the management of risks, not the management of returns.
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The distinction between investment and speculation in common stocks has always been a useful one and its disappearance is cause for concern.
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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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Mr. Market’s job is to provide you with prices; your job is to decide whether it is to your advantage to act on them. You no not have to trade with hime just because he constantly begs you to.
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The true investor… will do better if he forgets about the stock market and pays attention to his dividend returns and to the operation results of his companies.
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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.
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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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Whether we like it or not, government intervention in the face of surplus is here to stay.
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No statement is more true and better applicable to Wall Street than the famous warning of Santayana: “Those who do not remember the past are condemned to repeat it”.
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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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By refusing to pay too much for an investment, you minimize the chances that your wealth will ever disappear or suddenly be destroyed.
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It is a misfortune of the times that all of us must needs be amateur economists-including, and perhaps especially, the professionals.
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Buy when most people, including experts, are pessimistic, and sell when they are actively optimistic.
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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.
BENJAMIN GRAHAM