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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.

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
Value
Test
Initially
Security
Beat
Urge
Study
Price
Versus
Effort
Tests
Urges
Possible
Beats
Smallest
Values
Market
Efforts
Beginner
Money
Waste
Buying
Sums
Trying
Judgment
Investing
Beginners

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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.
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Abnormally good or abnormally bad conditions do not last forever.
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Successful investing is about managing risk, not avoiding it.
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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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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
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An intelligent investor gets satisfaction from the thought that his operations are exactly opposite to those of the crowd.
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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 best values today are often found in the stocks that were once hot and have since gone cold.
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The investor's primary interest lies in acquiring and holding suitable securities at suitable prices.
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The beauty of periodic rebalancing is that it forces you to base your investing decisions on a simple, objective standard.
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The thing that I have been emphasizing in my own work for the last few years has been the group approach. To try to buy groups of stocks that meet some simple criterion for being undervalued-regardless of the industry and with very little attention to the individual company.
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Mr. Market does not always price stocks the way an appraiser or a private buyer would value a business. Instead, when stocks are going up, he happily pays more than their objective value and, when they are going down, he is desperate to dump them for less than their true worth.
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The only thing you should do with pro forma earnings is ignore them.
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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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Even the most conservative must realize that the recent transformation of surplus from an individual to a national disaster implies a scathing indictment of our capitalist system as it has now developed.
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Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it – even though others may hesitate or differ.
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The sillier the market's behavior, the greater the opportunity for the business like investor.
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If we assume that there are normal or standard income results to be obtained from investing money in securities, then the role of the adviser can be more readily established. He will use his superior training and experience to protect his clients against mistakes and to make sure that they obtain the results to which their money is entitled.
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There is a close logical connection between the concept of a safety margin and the principle of diversification.
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