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Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.

Benjamin Graham

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
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
An intelligent investor gets satisfaction from the thought that his operations are exactly opposite to those of the crowd.
BENJAMIN GRAHAM

Intelligent Investing Opposites
Experience teaches that the time to buy stocks is when their price is unduly depressed by temporary adversity. In other words, they should be bought on a bargain basis or not at all.
BENJAMIN GRAHAM

Adversity Should Teach
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.
BENJAMIN GRAHAM

Attention Investing Pay
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
The intelligent investor gets interested in big growth stocks not when they are at their most popular – but when something goes wrong.
BENJAMIN GRAHAM

Growth Intelligent Investing
No statement is more true and better applicable to Wall Street than the famous warning of Santayana: “Those who do not remember the past are condemned to repeat it”.
BENJAMIN GRAHAM

Investing Past Wall
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
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
The existence of such a war chest might go far to strengthen our prestige and frighten off any would be assailant.
BENJAMIN GRAHAM

Assailant Chest Prestige Strengthen War
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.
BENJAMIN GRAHAM

Intelligent Successful Technique
The qualitative factors upon which most stress is laid are the nature of the business and the character of the management. These elements are exceedingly important, but they are also exceedingly difficult to deal with intelligently.
BENJAMIN GRAHAM

Character Important Stress
Obvious prospects for physical growth in a business do not translate into obvious profits for investors.
BENJAMIN GRAHAM

Growth Investing Profit
Many progressive economists insist that gold is now in essentially the same position as silver and that the arguments the simon-pure gold advocates use against the white metal can be directed with equal effect against their own fetish.
BENJAMIN GRAHAM

Arguments Gold Use White
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 GRAHAM

Effort Loss Mistakes

Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.

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Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.

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