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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

Good managements produce a good average market price, and bad managements produce bad market prices.
BENJAMIN GRAHAM

Average Good Man Management
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.
BENJAMIN GRAHAM

Hope Money Time
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
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.
BENJAMIN GRAHAM

Emotional Long Running
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
The most striking thing about Graham’s discussion of how to allocate your assets between stocks and bonds is that he never mentions the word “age”.
BENJAMIN GRAHAM

Age Assets Investing
Never buy a stock because it has gone up or sell one because it has gone down.
BENJAMIN GRAHAM

Gone Investing Sell
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.
BENJAMIN GRAHAM

Errors Odds Safety
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
Stock speculation is largely a matter of A trying to decide what B, C and D are likely to think-with B, C and D trying to do the same.
BENJAMIN GRAHAM

Matter Thinking Trying
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
It is absurd to think that the general public can ever make money out of market forecasts.
BENJAMIN GRAHAM

Investing Making Money Thinking
At heart, “uncertainty” and “investing” are synonyms.
BENJAMIN GRAHAM

Heart Investing Synonym
An investor calculates what a stock is worth, based on the value of its businesses.
BENJAMIN GRAHAM

Business Investing Investors Values
Why should the cotton growers suffer if there is shortage of wheat?
BENJAMIN GRAHAM

Cotton Suffering Wheat
By refusing to pay too much for an investment, you minimize the chances that your wealth will ever disappear or suddenly be destroyed.
BENJAMIN GRAHAM

Investing Pay Too Much

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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Popular Authors

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