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High valuations entail high risks.

Benjamin Graham

The genuine investor in common stocks does not need a great equipment of brain and knowledge, but he does need some unusual qualities of character
BENJAMIN GRAHAM

Brain Character Quality
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
It’s nonsensical to derive a price/earnings ratio by dividing the known current price by unknown future earnings.
BENJAMIN GRAHAM

Earning Investing Ratios
The distinction between investment and speculation in common stocks has always been a useful one and its disappearance is cause for concern.
BENJAMIN GRAHAM

Causes Common Investing
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 GRAHAM

Character Giving Years
To establish the right price for a stock, the market must have adequate information, but it by no means follows that is the market has this information it will thereupon establish the right price.
BENJAMIN GRAHAM

Adequate Information Mean
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
An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return.
BENJAMIN GRAHAM

Analysis Promise Safety
To 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.
BENJAMIN GRAHAM

Average Sound Wall
The beauty of periodic rebalancing is that it forces you to base your investing decisions on a simple, objective standard.
BENJAMIN GRAHAM

Decision Investing Simple
By developing your discipline and courage, you can refuse to let other people’s mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.
BENJAMIN GRAHAM

Destiny Discipline Swings
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
The only thing you should do with pro forma earnings is ignore them.
BENJAMIN GRAHAM

Earning Investing Should
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.
BENJAMIN GRAHAM

Being Investing Probability Wrong
It is a misfortune of the times that all of us must needs be amateur economists-including, and perhaps especially, the professionals.
BENJAMIN GRAHAM

Economist Including Needs Profession
You must never delude yourself into thinking that you’re investing when you’re speculating.
BENJAMIN GRAHAM

Investing Speculating Thinking
Successful investing is about managing risk, not avoiding it.
BENJAMIN GRAHAM

Investing Risk Successful
The story of Joseph in Egypt and of the seven fat and the seven lean years has passed into the homely wisdom of the ages; but our economic thinking seems to have lost contact with so simple and basic approach to prudent management of a nations welfare.
BENJAMIN GRAHAM

Egypt Seems Seven Simple Thinking Year
Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.
BENJAMIN GRAHAM

Issues Portfolios Quality
Even defensive portfolios should be changed from time to time, especially if the securities purchased have an apparently excessive advance and can be replaced by issues much more reasonable priced.
BENJAMIN GRAHAM

Investing Issues Portfolio Purchase
The volume of credit depends upon three factors: the desire to borrow, the ability to lend and the desire to lend.
BENJAMIN GRAHAM

Credit Desire Three
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.
BENJAMIN GRAHAM

Investing Issues Movement
The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices.
BENJAMIN GRAHAM

Interest Lying Market Timing
Both individual skill (art) and chance are important factors in determining success or failure.
BENJAMIN GRAHAM

Art Important Skills
Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.
BENJAMIN GRAHAM

Drop Sells Stock Substantial
Diversification is an established tenet of conservative investment.
BENJAMIN GRAHAM

Conservative Investing Investment
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

High valuations entail high risks.

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High valuations entail high risks.

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