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Why should the cotton growers suffer if there is shortage of wheat?

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
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.
BENJAMIN GRAHAM

Being Investing Probability Wrong
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
A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.
BENJAMIN GRAHAM

Ownership Share Trouble Value
We urge the beginner in security buying not to waste his efforts and his money in trying to beat the market. Let him study security values and initially test out his judgment on price versus value with the smallest possible sums.
BENJAMIN GRAHAM

Beginner Effort Trying
you may take it as an axiom that you cannot profit in Wall Street by continuously doing the obvious or the popular thing
BENJAMIN GRAHAM

May Profit Wall
Those with the enterprise lack the money and those with the money lack the enterprise to buy stocks when they are cheap.
BENJAMIN GRAHAM

Cheap Enterprise Enterprises Investing Stock
Obvious prospects for physical growth in a business do not translate into obvious profits for investors.
BENJAMIN GRAHAM

Growth Investing Profit
The qualitative factors upon which most stress is laid are the nature of the business and the character of the management. These elements are exceedingly important, but they are also exceedingly difficult to deal with intelligently.
BENJAMIN GRAHAM

Character Important Stress
… 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
If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.
BENJAMIN GRAHAM

Intelligent Investing Shopping
Thousands of people have tried, and the evidence is clear: The more you trade, the less you keep.
BENJAMIN GRAHAM

Evidence Investing People
In the financial markets, hindsight is forever 20/20, but foresight is legally blind. And thus, for most investors, market timing is a practical and emotional impossibility.
BENJAMIN GRAHAM

Emotional Forever Investing
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.
BENJAMIN GRAHAM

Change Intelligent Significant Sound
It is a misfortune of the times that all of us must needs be amateur economists-including, and perhaps especially, the professionals.
BENJAMIN GRAHAM

Economist Including Needs Profession
To have a true investment, there must be a true margin of safety. And a true margin of safety is one that can be demonstrated by figures, by persuasive reasoning, and by reference to a body of actual experience.
BENJAMIN GRAHAM

Body Investment Safety
It is a fact worth pondering that four centuries ago the evil of “an abundance or surplus” arose from its being kept off the market, while today the evil of surplus lies in its being thrown upon the market.
BENJAMIN GRAHAM

Evil Four Lying
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.
BENJAMIN GRAHAM

Facts Paradoxical Subjects
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
To be an investor you must be a believer in a better tomorrow.
BENJAMIN GRAHAM

Believer Investing Tomorrow
The distinction between investment and speculation in common stocks has always been a useful one and its disappearance is cause for concern.
BENJAMIN GRAHAM

Causes Common Investing
I quickly convinced myself that the true key to material happiness lay in a modest standard of living which could be achieved with little difficulty under almost all economic conditions.
BENJAMIN GRAHAM

Economic Keys Littles
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.
BENJAMIN GRAHAM

Common Ownership Share
Rather should we say that the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion.
BENJAMIN GRAHAM

Countless Emotion Party Rather
Most businesses change in character and quality over the years, sometimes for the better, perhaps more often for the worse. The investor need not watch his companies’ performance like a hawk; but he should give it a good, hard look from time to time.
BENJAMIN GRAHAM

Character Giving Years
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.
BENJAMIN GRAHAM

Common Sense Ideas Thinking
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

Why should the cotton growers suffer if there is shortage of wheat?

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Why should the cotton growers suffer if there is shortage of wheat?

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