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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
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
Many
Views
Currents
Equivalent

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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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Price statistics show clearly that instability in raw-material prices is a prime cause of instability of other prices.
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Buy when most people, including experts, are pessimistic, and sell when they are actively optimistic.
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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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Even defensive portfolios should be changed from time to time, especially if the securities purchased have an apparently excessive advance and can be replaced by issues much more reasonable priced.
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The correct attitude of the security analyst toward the stock market might well be that of a man toward his wife. He shouldn't pay too much attention to what the lady says, but he can't afford to ignore it entirely. That is pretty much the position that most of us find ourselves vis-à-vis the stock market.
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Always buy your straw hats in the Winter
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The stock market resembles a huge laundry in which institutions take in large blocks of each others washing ... without rhyme or reason.
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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.
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In an ideal world, the intelligent investor would hold stocks only when they are cheap and sell them when they become overpriced, then duck into the bunker of bonds and cash until stocks again become cheap enough to buy.
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... 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.
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In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand.
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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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Stocks can be dynamite.
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Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.
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Why should the cotton growers suffer if there is shortage of wheat?
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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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It should be remembered that a decline of 50% fully offsets a preceding advance of 100%.
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