The essence of investment management is the management of risks, not the management of returns.
BENJAMIN GRAHAMNo 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”.
More Benjamin Graham Quotes
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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.
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The purpose of this book is to supply, in the form suitable for laymen, guidance in the adoption and execution of an investment policy.
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Obvious prospects for physical growth in a business do not translate into obvious profits for investors.
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There is a close logical connection between the concept of a safety margin and the principle of diversification.
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In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand.
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The intelligent investor is a realist who sells to optimists and buys from pessimists.
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Nearly everyone interested in common stocks wants to be told by someone else what he thinks the market is going to do. The demand being there, it must be supplied.
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The idea of storage as a solution of economic problems at least has the support of common sense.It is diametrically opposed to the topsy-turvy Alice-in-Wonderland reasoning that has marked so much of our depression thinking and policy.
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Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.
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As in roulette, same is true of the stock trader, who will find that the expense of trading weights the dice heavily against him.
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The memory of the financial community is proverbially and distressingly short.
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Always remember that market quotations are there for convenience, either to be taken advantage of or to be ignored.
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People who invest make money for themselves; people who speculate make money for their brokers. And that, in turn, is why Wall Street perennially downplays the durable virtues of investing and hypes the gaudy appeal of speculation.
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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.
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Buy not on optimism, but on arithmetic.
BENJAMIN GRAHAM