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Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of good business conditions. The purchasers view the good current earnings as equivalent to 'earning power' and assume that prosperity is equivalent to safety.

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
Many
Views
Currents
Equivalent
Years
Security
Assuming
Earning
Good
Taught
Prosperity
Investors
Quality
Lows
Chief
Purchasers
Times
Safety
Chiefs
Securities
Business
View
Assume
Earnings
Power
Loss
Current
Purchase
Come
Conditions
Observation
Losses

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Many progressive economists insist that gold is now in essentially the same position as silver and that the arguments the simon-pure gold advocates use against the white metal can be directed with equal effect against their own fetish.
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Stock speculation is largely a matter of A trying to decide what B, C and D are likely to think-with B, C and D trying to do the same.
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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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It always seemed, and still seems, ridiculously simple to say that if one can acquire a diversified group of common stocks at a price less than the applicable net current assets alone - after deducting all prior claims, and counting as zero the fixed and other assets - the results should be quite satisfactory.
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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 distinction between investment and speculation in common stocks has always been a useful one and its disappearance is cause for concern.
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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.
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It is worth pointing out that assuredly not more than one person out of a hundred who stayed in the market after after 1925 emerged from it with a net profit and that the speculative losses taken were appalling.
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A defensive investor can always prosper by looking patiently and calmly through the wreckage of a bear market.
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The only thing you should do with pro forma earnings is ignore them.
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Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.
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The chief obstacle to success lies in the stubborn fact that if the favorable prospects of a concern are clearly apparent they are almost always reflected already in the current price of the stock. Buying such an issue is like betting on a topheavy favorite in a horse race. The chances may be on your side, but the real odds are against you.
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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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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.
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The investor's chief problem - and even his worst enemy - is likely to be himself.
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It should be remembered that a decline of 50% fully offsets a preceding advance of 100%.
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Diversification is an established tenet of conservative investment.
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Successful investing is about managing risk, not avoiding it.
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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.
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