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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.

Benjamin Graham

Rather should we say that the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion.
BENJAMIN GRAHAM

Countless Emotion Party Rather
Whether we like it or not, government intervention in the face of surplus is here to stay.
BENJAMIN GRAHAM

Faces Government Surplus
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.
BENJAMIN GRAHAM

Body Investment Safety
People who invest make money for themselves; people who speculate make money for their brokers. And that, in turn, is why Wall Street perennially downplays the durable virtues of investing and hypes the gaudy appeal of speculation.
BENJAMIN GRAHAM

Hype People Wall
The investor’s chief problem – and even his worst enemy – is likely to be himself.
BENJAMIN GRAHAM

Enemy Greed Money Worst
The thing that I have been emphasizing in my own work for the last few years has been the group approach. To try to buy groups of stocks that meet some simple criterion for being undervalued-regardless of the industry and with very little attention to the individual company.
BENJAMIN GRAHAM

Simple Trying Years
Stock speculation is largely a matter of A trying to decide what B, C and D are likely to think-with B, C and D trying to do the same.
BENJAMIN GRAHAM

Matter Thinking Trying
The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists.
BENJAMIN GRAHAM

Intelligent Optimism Swings
you may take it as an axiom that you cannot profit in Wall Street by continuously doing the obvious or the popular thing
BENJAMIN GRAHAM

May Profit Wall
Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.
BENJAMIN GRAHAM

Drop Sells Stock Substantial
The modern world is not geared properly to the storage of goods.
BENJAMIN GRAHAM

Goods Modern World
The people of the United States will not tolerate another deep depression that arises not from any lack of natural resources, productive capacity or man and brain power, but solely from imperfections in the functioning of the system of finance capitalism.
BENJAMIN GRAHAM

Imperfection Men People
I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities.
BENJAMIN GRAHAM

Opportunity Order Technique
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
Do not let anyone else run your business
BENJAMIN GRAHAM

Anyone Buisness Else Running
There is a close logical connection between the concept of a safety margin and the principle of diversification.
BENJAMIN GRAHAM

Investing Principles Safety
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.
BENJAMIN GRAHAM

Earning Loss Real Risk
Wall Street has a few prudent principles; the trouble is that they are always forgotten when they are most needed.
BENJAMIN GRAHAM

Investing Principles Wall
The sillier the market’s behavior, the greater the opportunity for the business like investor.
BENJAMIN GRAHAM

Behavior Investing Opportunity
Why should the cotton growers suffer if there is shortage of wheat?
BENJAMIN GRAHAM

Cotton Suffering Wheat
The intelligent investor shouldn’t ignore Mr. Market entirely. Instead, you should do business with him- but only to the extent that it serves your interests.
BENJAMIN GRAHAM

Intelligent Investing Should
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
Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.
BENJAMIN GRAHAM

Controlling Games Investing
Undervaluations caused by neglect or prejudice may persist for an inconveniently long time, and the same applies to inflated prices caused by over-enthusiasm or artificial stimulants.
BENJAMIN GRAHAM

Enthusiasm Long May Prejudice Time
Obvious prospects for physical growth in a business do not translate into obvious profits for investors.
BENJAMIN GRAHAM

Growth Investing Profit
Buy not on optimism, but on arithmetic.
BENJAMIN GRAHAM

Intelligent Investing Optimism
The intelligent investor should recognize that market panics can create great prices for good companies and good prices for great companies.
BENJAMIN GRAHAM

Intelligent Investing Panic

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

Related Topics

Popular Authors

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