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It’s nonsensical to derive a price/earnings ratio by dividing the known current price by unknown future earnings.

Benjamin Graham

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
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
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
Confusing speculation with investment is always a mistake.
BENJAMIN GRAHAM

Confusing Investing Mistakes
The memory of the financial community is proverbially and distressingly short.
BENJAMIN GRAHAM

Community Investing Memories
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
It is worth pointing out that assuredly not more than one person out of a hundred who stayed in the market after after 1925 emerged from it with a net profit and that the speculative losses taken were appalling.
BENJAMIN GRAHAM

Hundred Loss Taken
The investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage.
BENJAMIN GRAHAM

Investing Permit Worried
High valuations entail high risks.
BENJAMIN GRAHAM

Investing Risk Valuation
As in roulette, same is true of the stock trader, who will find that the expense of trading weights the dice heavily against him.
BENJAMIN GRAHAM

Intelligent Investing Weight
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
We have not known a single person who has consistently or lastingly make money by thus “following the market”. We do not hesitate to declare this approach is as fallacious as it is popular.
BENJAMIN GRAHAM

Approach Investing Making Money
It is a fact worth pondering that four centuries ago the evil of “an abundance or surplus” arose from its being kept off the market, while today the evil of surplus lies in its being thrown upon the market.
BENJAMIN GRAHAM

Evil Four Lying
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
Even the most conservative must realize that the recent transformation of surplus from an individual to a national disaster implies a scathing indictment of our capitalist system as it has now developed.
BENJAMIN GRAHAM

Conservative Realizing Transformation
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

It’s nonsensical to derive a price/earnings ratio by dividing the known current price by unknown future earnings.

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It’s nonsensical to derive a price/earnings ratio by dividing the known current price by unknown future earnings.

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