The defensive (or passive) investor will place chief emphasis on the avoidance of serious mistakes or losses. His second aim will be freedom from effort, annoyance, and the need for making frequent decisions.
BENJAMIN GRAHAMThe 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.
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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If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting what`s going to happen to the stock market.
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Nothing important on Wall Street can be counted on to occur exactly in the same way as it happened before.
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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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Speculative stock movements are carried too far in both directions, frequently in the general market and at all times in at least some of the individual issues.
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To have a true investment, there must be a true margin of safety. And a true margin of safety is one that can be demonstrated by figures, by persuasive reasoning, and by reference to a body of actual experience.
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Always buy your straw hats in the Winter
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It is a fact worth pondering that four centuries ago the evil of “an abundance or surplus” arose from its being kept off the market, while today the evil of surplus lies in its being thrown upon the market.
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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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A speculator gambles that a stock will go up in price because somebody else will pay even more for it.
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In the short run, the market is a voting machine, but in the long run it is a weighing machine.
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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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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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In the financial markets, hindsight is forever 20/20, but foresight is legally blind. And thus, for most investors, market timing is a practical and emotional impossibility.
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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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An investor calculates what a stock is worth, based on the value of its businesses.
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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 underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in the financial mechanisms and climate.
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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 most striking thing about Graham’s discussion of how to allocate your assets between stocks and bonds is that he never mentions the word “age”.
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Obvious prospects for physical growth in a business do not translate into obvious profits for investors.
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Both a priori reasoning and experience teach us that as as these funds grow larger the geometrical rate of growth by compound interest ultimately defeats itself.
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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 stock market resembles a huge laundry in which institutions take in large blocks of each others washing … without rhyme or reason.
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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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The chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.
BENJAMIN GRAHAM