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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).

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
Return
Beyond
Company
Invested
Look
Earning
Looks
Businesses
Much
Capital
Investing
Truly

More quotes by Benjamin Graham

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Knowledge is only one ingredient on arriving at a stock's proper price. The other ingredient, fully as important as information, is sound judgment.
Benjamin Graham
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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.
Benjamin Graham
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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.
Benjamin Graham
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The beauty of periodic rebalancing is that it forces you to base your investing decisions on a simple, objective standard.
Benjamin Graham
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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.
Benjamin Graham
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you may take it as an axiom that you cannot profit in Wall Street by continuously doing the obvious or the popular thing
Benjamin Graham
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Successful investing is about managing risk, not avoiding it.
Benjamin Graham
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It should be remembered that a decline of 50% fully offsets a preceding advance of 100%.
Benjamin Graham
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Always buy your straw hats in the Winter
Benjamin Graham
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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.
Benjamin Graham
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Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.
Benjamin Graham
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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.
Benjamin Graham
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The chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.
Benjamin Graham
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The investor's primary interest lies in acquiring and holding suitable securities at suitable prices.
Benjamin Graham
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The defensive (or passive) investor will place chief emphasis on the avoidance of serious mistakes or losses. His second aim will be freedom from effort, annoyance, and the need for making frequent decisions.
Benjamin Graham
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Good managements produce a good average market price, and bad managements produce bad market prices.
Benjamin Graham
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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.
Benjamin Graham
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Why should the cotton growers suffer if there is shortage of wheat?
Benjamin Graham
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When somebody asserts that a stock has an earning power of so much, I am sure that the person who hears him doesn't know what he means, and there is a good chance that the man who uses it doesn't know what it means.
Benjamin Graham
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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.
Benjamin Graham