Benjamin Graham Quotes

Benjamin Graham Quotes

The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored.

 

By developing your discipline and courage, you can refuse to let other people’s mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.

 

In the short run the market is a voting machine, but in the long run it is a weighing machine.

 

The Interborough issues are an example of a rather special group of situations in which analysis may reach more definite conclusions respecting intrinsic value than in the ordinary case. These situations may involve a liquidation or give rise to technical operations known as “arbitrage” or “hedging.

 

The intelligent investor is a realist who sells to optimists and buys from pessimists.

 

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.

The chief losses to investors come from the purchase of low-quality securities at times of favourable business conditions.

 

One example of a high-tech company that submits to a Graham type of analysis is Amazon.com. Though it does business exclusively on the Web, Amazon is essentially a retailer, and it may be evaluated in the same way as Wal-Mart, Sears, and so forth. The question, as always, is, does the business provide an adequate margin of safety at a given market price. For much of Amazon’s short life, the stock was wildly overpriced. But when the dot-com bubble burst, its securities collapsed. Buffett himself bought Amazon’s deeply discounted bonds after the crash, when there was much fearful talk that Amazon was headed for bankruptcy. The bonds subsequently rose to par, and Buffett made a killing.

 

Successful investing is about managing risk, not avoiding it.

To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework.

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.

You do not have to be smarter than the rest. You have to be more disciplined than the rest.

 

If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.

 

A great company is not a great investment if you pay too much for the stock.

 

Do not let anyone else run your business

 

An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.

 

While enthusiasm may be necessary for great accomplishments elsewhere, on Wall Street it almost invariably leads to disaster.

 

The individual investor should act consistently as an investor and not as a speculator. This means. That he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money’s worth for his purchase.

 

To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.

 

The sillier the market’s behaviour, the greater the opportunity for the business-like investor.

 

While a trend shown in the past is a fact, a “future trend” is only an assumption.

 

The best values today are often found in the stocks that were once hot and have since gone cold.

 

Though business conditions may change, corporations and securities may change, and financial institutions and regulations may change, human nature remains the same. Thus the important and difficult part of sound investment, which hinges upon the investor’s own temperament and attitude, is not much affected by the passing years.

 

Successful investing is about managing risk, not avoiding it.

 

we have complaints that institutional dominance of the stock market has put ‘the small investor at a disadvantage because he can’t compete with the trust companies’ huge resources, etc. The facts are quite the opposite. It may be that the institutions are better equipped than the individual to speculate in the market. But I am convinced that an individual investor with sound principles, and soundly advised, can do distinctly better over the long pull than large institutions.

 

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. 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?

 

Abnormally good or abnormally bad conditions do not last forever.

 

Speculators often prosper through ignorance; it is a cliché that in a roaring bull market knowledge is superfluous and experience is a handicap. But the typical experience of the speculator is one of temporary profit and ultimate loss

 

Bond selection is primarily a negative art. It is a process of exclusion and rejection, rather than of search and acceptance.

By refusing to pay too much for an investment, you minimize the chances that your wealth will ever disappear or suddenly be destroyed.

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