Quote

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.

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
Would
Investing
Duck
World
Sell
Stocks
Sells
Bonds
Ideals
Ducks
Intelligent
Cheap
Overpriced
Hold
Investors
Bunker
Become
Cash
Bunkers
Enough
Ideal
Investor

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I am more and more impressed with the possibilities of history's repeating itself on many different counts. You don't get very far in Wall Street with the simple, convenient conclusion that a given level of prices is not too high.
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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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Thousands of people have tried, and the evidence is clear: The more you trade, the less you keep.
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Why should the cotton growers suffer if there is shortage of wheat?
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If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.
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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.
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To see how much a company is truly earning on the capital it deploys in its businesses, look beyond EPS to Return on Invested Capital (ROIC).
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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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Buy when most people, including experts, are pessimistic, and sell when they are actively optimistic.
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Only in the exceptional case, where the integrity and competence of the advisers have been thoroughly demonstrated, should the investor act upon the advice of others without understanding and approving the decision made.
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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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Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.
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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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In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand.
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The essence of investment management is the management of risks, not the management of returns.
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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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No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. Only by insisting on what Graham called the margin of safety - never overpaying, no matter how exciting an investment seems to be - can you minimize your odds of error.
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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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Stocks can be dynamite.
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