It’s nonsensical to derive a price/earnings ratio by dividing the known current price by unknown future earnings.
BENJAMIN GRAHAMIn the old legend the wise men finally boiled down the history of mortal affairs into a single phrase: ‘This too will pass.’
More Benjamin Graham Quotes
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Buy not on optimism, but on arithmetic.
BENJAMIN GRAHAM -
The existence of such a war chest might go far to strengthen our prestige and frighten off any would be assailant.
BENJAMIN GRAHAM -
Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it – even though others may hesitate or differ.
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The intelligent investor shouldn’t ignore Mr. Market entirely. Instead, you should do business with him- but only to the extent that it serves your interests.
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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.
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I am more and more impressed with the possibilities of history’s repeating itself on many different counts. You don’t get very far in Wall Street with the simple, convenient conclusion that a given level of prices is not too high.
BENJAMIN GRAHAM -
When somebody asserts that a stock has an earning power of so much, I am sure that the person who hears him doesn’t know what he means, and there is a good chance that the man who uses it doesn’t know what it means.
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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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Real investment risk is measured not by the percent that a stock may decline in price in relation to the general market in a given period, but by the danger of a loss of quality and earnings power through economic changes or deterioration in management.
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There is something paradoxical in the fact that by establishing an export market we subject our entire domestic production to the vagaries of that market.
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The sillier the market’s behavior, the greater the opportunity for the business like investor.
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Wall Street people learn nothing and forget everything.
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In other words, the market is not a weighing machine, on which the value of each issue is recorded by an exact and impersonal mechanism, in accordance with its specific qualities.
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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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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