To see how much a company is truly earning on the capital it deploys in its businesses, look beyond EPS to Return on Invested Capital (ROIC).
BENJAMIN GRAHAMTraditionally the investor has been the man with patience and the courage of his convictions who would buy when the harried or disheartened speculator was selling.
More Benjamin Graham Quotes
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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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The world has not learned the technique of balanced expansion without the resultant commercial and financial congestion.
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you may take it as an axiom that you cannot profit in Wall Street by continuously doing the obvious or the popular thing
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High valuations entail high risks.
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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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Always buy your straw hats in the Winter
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Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.
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Wall Street has a few prudent principles; the trouble is that they are always forgotten when they are most needed.
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The market is always making mountains out of molehills and exaggerating ordinary vicissitudes into major setbacks.
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Investing is most intelligent when it is most businesslike.
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If General Motors is worth $60 a share to an investor it must be because the full common-stock ownership of this gigantic enterprise as a whole is worth 43 million (shares) times $60, or no less than $2,600 million.
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Stocks can be dynamite.
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The ideal form of common stock analysis leads to a valuation of the issue which can be compared with the current price to determine whether or not the security is an attractive purchase.
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The best values today are often found in the stocks that were once hot and have since gone cold.
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The existence of such a war chest might go far to strengthen our prestige and frighten off any would be assailant.
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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.
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The underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in the financial mechanisms and climate.
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The Reservoir system will function not only as an equalizer of business conditions, but also as a national store to meet further emergencies, such as war and drought, and-most important of all-as the concrete means of developing a steadily higher living standard for all.
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Both individual skill (art) and chance are important factors in determining success or failure.
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The intelligent investor should recognize that market panics can create great prices for good companies and good prices for great companies.
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The Reservoir plan is an engineering mechanism applied to the field of economics, and in its essence it has nothing to do with democracy or any other political philosophy.
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A speculator gambles that a stock will go up in price because somebody else will pay even more for it.
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Knowledge is only one ingredient on arriving at a stock’s proper price. The other ingredient, fully as important as information, is sound judgment.
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Though business conditions may change, corporations and securities may change, and financial institutions and regulations may change, human nature remains the same.
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Experience teaches that the time to buy stocks is when their price is unduly depressed by temporary adversity. In other words, they should be bought on a bargain basis or not at all.
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Successful investment may become substantially a matter of techniques and criteria that are learnable, rather than the product of unique and incommunicable mental powers.
BENJAMIN GRAHAM