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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.

Benjamin Graham

there is a tendency in part of Wall Street people to pay excessive attention to the most recent figures and the present financial picture.
BENJAMIN GRAHAM

Attention People Wall
The chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.
BENJAMIN GRAHAM

Investing Loss Quality
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.
BENJAMIN GRAHAM

Average Sound Wall
Every corporate security may be best viewed, in the first instance, as an ownership interest in, or a claim against, a specific business enterprise.
BENJAMIN GRAHAM

Firsts May Ownership
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.
BENJAMIN GRAHAM

Conclusion Facts Judgment May Sound
In security analysis the prime stress is laid upon protection against untoward events. We obtain this protection by insisting upon margins of safety, or values well in excess of the price paid.
BENJAMIN GRAHAM

Events Safety Stress
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.
BENJAMIN GRAHAM

Intelligent Investing Should
It must be fundamentally wrong to reduce production of food and fiber while one-third of our population is still ill fed and ill clothed.
BENJAMIN GRAHAM

Clothed Feds Fiber Population
Although there are good and bad companies, there is no such thing as a good stock; there are only good stock prices, which come and go.
BENJAMIN GRAHAM

Bad Company Good Investing Price Stock
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.
BENJAMIN GRAHAM

Choices Impersonal Issues Voting
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.
BENJAMIN GRAHAM

Character Fashion Thinking
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
The beauty of periodic rebalancing is that it forces you to base your investing decisions on a simple, objective standard.
BENJAMIN GRAHAM

Decision Investing Simple
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.
BENJAMIN GRAHAM

Earning Loss Real Risk
The function of the margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future.
BENJAMIN GRAHAM

Essence Safety Unnecessary
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

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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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.

Related Topics

Popular Authors

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