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Buy not on optimism, but on arithmetic.

Benjamin Graham

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

Investing Speculating Thinking
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
Both individual skill (art) and chance are important factors in determining success or failure.
BENJAMIN GRAHAM

Art Important Skills
Price statistics show clearly that instability in raw-material prices is a prime cause of instability of other prices.
BENJAMIN GRAHAM

Causes Materials Raw Statistics
A speculator gambles that a stock will go up in price because somebody else will pay even more for it.
BENJAMIN GRAHAM

Investing Pay Speculators
There is a close logical connection between the concept of a safety margin and the principle of diversification.
BENJAMIN GRAHAM

Investing Principles Safety
Whether we like it or not, government intervention in the face of surplus is here to stay.
BENJAMIN GRAHAM

Faces Government Surplus
The intelligent investor is likely to need considerable will power to keep from following the crowd.
BENJAMIN GRAHAM

Crowd Following Intelligent Needs
To be an investor you must be a believer in a better tomorrow.
BENJAMIN GRAHAM

Believer Investing Tomorrow
It must be fundamentally wrong to reduce production of food and fiber while one-third of our population is still ill fed and ill clothed.
BENJAMIN GRAHAM

Clothed Feds Fiber Population
The modern world is not geared properly to the storage of goods.
BENJAMIN GRAHAM

Goods Modern World
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
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

Average Current Past Price Years
Buy not on optimism, but on arithmetic.
BENJAMIN GRAHAM

Intelligent Investing Optimism
Nothing important on Wall Street can be counted on to occur exactly in the same way as it happened before.
BENJAMIN GRAHAM

Important Investing Wall
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
BENJAMIN GRAHAM

Ignorance Loss Typical

Buy not on optimism, but on arithmetic.

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Buy not on optimism, but on arithmetic.

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