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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

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
The only thing you should do with pro forma earnings is ignore them.
BENJAMIN GRAHAM

Earning Investing Should
The money cost of the reservoir plan literally fades into insignificance when it is compared with the financial burden which the great depression imposed on the nation.
BENJAMIN GRAHAM

Cost Depression Financial Great
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
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
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 loss of public confidence in the financial community growing out of its own conduct in recent years. I insist that more damage has been done to stock values and to the future of equities from inside Wall Street than from outside Wall Street.
BENJAMIN GRAHAM

Loss Wall Years
There is a close logical connection between the concept of a safety margin and the principle of diversification.
BENJAMIN GRAHAM

Investing Principles Safety
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
The modern world is not geared properly to the storage of goods.
BENJAMIN GRAHAM

Goods Modern World
Both individual skill (art) and chance are important factors in determining success or failure.
BENJAMIN GRAHAM

Art Important Skills
The intelligent investor should recognize that market panics can create great prices for good companies and good prices for great companies.
BENJAMIN GRAHAM

Intelligent Investing Panic
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
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
Price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal.
BENJAMIN GRAHAM

Fall Investing Opportunity
The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists.
BENJAMIN GRAHAM

Intelligent Optimism Swings

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.

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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.

Related Topics

Popular Authors

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