Investment is most intelligent when it is most businesslike. It is amazing to see how many capable businessmen try to operate on Wall Street with complete disregard of all the sound principles through which they have gained success in their own undertakings. Yet every corporate security may best be viewed, in the first instance, as an ownership interest in, or a claim against, a specific business enterprise. And if a person sets out to make profits from security purchases and sales, he is embarking on a business venture of his own, which must be run in accordance with accepted business principles if it is to have a chance of success.
Do not try to make "business profits" out of securities - that is, returns in excess of normal interest and dividend income - unless you know as much about security values as you would need to know about the value of merchandise that you proposed to manufacture or deal in.
Most businesses change in character and quality over the years, sometimes for the better, perhaps more often for the worse. The investor need not watch his companies' performance like a hawk; but he should give it a good, hard look from time to time.
Obvious prospects for physical growth in a business do not translate into obvious profits for investors.
Ben Graham Quotes on Business Principles
The first and most obvious of these principles is: Know what you are doing—know your business.
A second business principle: Do not let anyone else run your business, unless (1) you can supervise his performance with adequate care and comprehension or (2) you have unusually strong reasons for placing implicit confidence in his integrity and ability.
A third business principle: Do not enter upon an operation—that is, manufacturing or trading in an item—unless a reliable calculation shows that it has a fair chance to yield a reasonable profit. In particular, keep away from ventures in which you have little to gain and much to lose.
A fourth business rule is more positive: 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.
Ben Graham Quotes on the Stock Market
The market offers smart investors an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal.
Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.
Regardless of all the apparatus and all the improvements in techniques, people still want to make money very fast. They still want to be on the right side of the market.
Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble... to give way to hope, fear and greed.
It is absurd to think that the general public can ever make money out of market forecasts.
Ben Graham Quotes on Investing Risks
The chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.
The risk of paying too high a price for good-quality stocks - while a real one - is not the chief hazard confronting the average buyer of securities. Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions. The purchasers view the current good earnings as equivalent to "earning power" and assume that prosperity is synonymous with safety.
Even with a margin [of safety] in the investor's favor, an individual security may work out badly. For the margin guarantees only that he has a better chance for profit than for loss - not that loss is impossible. But as the number of such commitments is increased the more certain does it become that the aggregate of the profits will exceed the aggregate of the losses.
Ben Graham Quotes on Wall Street
Wall Street people learn nothing and forget everything.
It is fortunate for Wall Street as an institution that a small minority of people can trade successfully and that many others think they can.
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.
Ben Graham's Most Famous Quotes
Investment is most intelligent when it is most businesslike.
Warren Buffett called this the best quote on investing ever written.
You are neither right nor wrong because people agree with you.
An investment is something that upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.
Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal.
Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble... to give way to hope, fear and greed.
Ben Graham's Advice to Beginner Investors
Finance has a fascination for many bright young people with limited means. They would like to be both intelligent and enterprising in the placement of their savings, even though investment income is much less important to them than their salaries. This attitude is all to the good. There is a great advantage for the young capitalist to begin his financial education and experience early. If he is going to operate as an aggressive investor he is certain to make some mistakes and to take some losses. Youth can stand these disappointments and profit by them. 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.
Ben Graham Quotes on Achieving Investment Results
To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.
I quickly convinced myself that the true key to happiness lay in a modest standard of living which could be achieved with little difficulty under almost all economic conditions.
Ben Graham Quotes on Investment vs. Speculation
An investment is something that upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.
The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell.
Ben Graham Quotes on Buying and Selling Stocks
If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.
The investor should have a definite selling policy for all his common stock commitments, corresponding to his buying techniques.
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.