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An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return.

Benjamin Graham

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Benjamin Graham
Age: 82 †
Born: 1894
Born: May 8
Died: 1976
Died: September 21
Economist
Financier
Investor
University Teacher
Writer
London
England
Principal
Operations
Analysis
Investment
Safety
Thorough
Promise
Operation
Return
Adequate
Upon
Promises

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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.
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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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The investor should be aware that even though safety of its principal and interest may be unquestioned, a long term bond could vary widely in market price in response to changes in interest rates.
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The investor has a right to expect good results to flow from a consistent and courageous application of the principle of buying after the market has declined substantially and selling after it has had a spectacular rise. But he cannot expect to reduce this principle to a simple and foolproof formula, with profits guaranteed and no anxious periods.
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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. 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.
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The chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.
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Do not let anyone else run your business
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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.
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Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.
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Never mingle your speculative and investment operations in the same account nor in any part of your thinking.
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In the short run, the market is a voting machine, but in the long run it is a weighing machine.
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You must never delude yourself into thinking that you're investing when you're speculating.
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Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.
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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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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.
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There is no reason to feel any shame in hiring someone to pick stocks or mutual funds for you. But there's one responsibility that you must never delegate. You, and no one but you, must investigate whether an adviser is trustworthy and charges reasonable fees.
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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.
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Diversification is an established tenet of conservative investment.
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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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The essence of investment management is the management of risks, not the management of returns.
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