By refusing to pay too much for an investment, you minimize the chances that your wealth will ever disappear or suddenly be destroyed.
BENJAMIN GRAHAMPrice fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal.
More Benjamin Graham Quotes
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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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Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble… to give way to hope, fear and greed.
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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.
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Successful investment may become substantially a matter of techniques and criteria that are learnable, rather than the product of unique and incommunicable mental powers.
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In the short-run, the market is a voting machine – reflecting a voter-registration test that requires only money, not intelligence or emotional stability – but in the long- run, the market is a weighing machine.
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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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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.
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In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand.
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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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No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. Only by insisting on what Graham called the “margin of safety” – never overpaying, no matter how exciting an investment seems to be – can you minimize your odds of error.
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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.
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The market is always making mountains out of molehills and exaggerating ordinary vicissitudes into major setbacks.
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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.
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It requires strength of character in order to think and to act in opposite fashion from the crowd and also patience to wait for opportunities that may be spaced years apart.
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Stocks can be dynamite.
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It is absurd to think that the general public can ever make money out of market forecasts.
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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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Though business conditions may change, corporations and securities may change, and financial institutions and regulations may change, human nature remains the same.
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there is a tendency in part of Wall Street people to pay excessive attention to the most recent figures and the present financial picture.
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Good managements produce a good average market price, and bad managements produce bad market prices.
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The ideal form of common stock analysis leads to a valuation of the issue which can be compared with the current price to determine whether or not the security is an attractive purchase.
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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.
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We urge the beginner in security buying not to waste his efforts and his money in trying to beat the market. Let him study security values and initially test out his judgment on price versus value with the smallest possible sums.
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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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There is a close logical connection between the concept of a safety margin and the principle of diversification.
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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