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Successful investing is about managing risk, not avoiding it.

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
Risk
Successful
Managing
Avoiding
Investing

More quotes by Benjamin Graham

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The best way to measure your investing success is not by whether you're beating the market but by whether you've put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.
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Diversification is an established tenet of conservative investment.
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It's nonsensical to derive a price/earnings ratio by dividing the known current price by unknown future earnings.
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The market is always making mountains out of molehills and exaggerating ordinary vicissitudes into major setbacks.
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People who invest make money for themselves people who speculate make money for their brokers. And that, in turn, is why Wall Street perennially downplays the durable virtues of investing and hypes the gaudy appeal of speculation.
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It is no difficult trick to bring a great deal of energy, study, and native ability into Wall Street and to end up with losses instead of profits. These virtues, if channeled in the wrong directions, become indistinguishable from handicaps.
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Never mingle your speculative and investment operations in the same account nor in any part of your thinking.
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Always buy your straw hats in the Winter
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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
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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 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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The chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.
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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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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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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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The only thing you should do with pro forma earnings is ignore them.
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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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Though business conditions may change, corporations and securities may change, and financial institutions and regulations may change, human nature remains the same. Thus the important and difficult part of sound investment, which hinges upon the investor's own temperament and attitude, is not much affected by the passing years.
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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 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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