Benjamin Graham Quotes

Abnormally good or abnormally bad conditions do not last forever.

The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists.

The value of any investment is, and always must be, a function of the price you pay for it.

I quickly convinced myself that the true key to material happiness lay in a modest standard of living which could be achieved with little difficulty under almost all economic conditions.

We define a bargain issue as one which, on the basis of facts established by analysis, appears to be worth considerably more that it is selling for.

Nothing important on Wall Street can be counted on to occur exactly in the same way as it happened before.

The beauty of periodic rebalancing is that it forces you to base your investing decisions on a simple, objective standard.

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.

The qualitative factors upon which most stress is laid are the nature of the business and the character of the management. These elements are exceedingly important, but they are also exceedingly difficult to deal with intelligently.

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.

Never buy a stock because it has gone up or sell one because it has gone down.

Buy when most people, including experts, are pessimistic, and sell when they are actively optimistic.

As in roulette, same is true of the stock trader, who will find that the expense of trading weights the dice heavily against him.

Obvious prospects for physical growth in a business do not translate into obvious profits for investors.

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.

If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting what`s going to happen to the stock market.

The intelligent investor gets interested in big growth stocks not when they are at their most popular - but when something goes wrong.

The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored.

Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.

The most striking thing about Graham's discussion of how to allocate your assets between stocks and bonds is that he never mentions the word "age".

In security analysis the prime stress is laid upon protection against untoward events. We obtain this protection by insisting upon margins of safety, or values well in excess of the price paid.

It should be remembered that a decline of 50% fully offsets a preceding advance of 100%.

Individuals who cannot master their emotions are ill-suited to profit from the investment process.

Wall Street people learn nothing and forget everything.

An intelligent investor gets satisfaction from the thought that his operations are exactly opposite to those of the crowd.

Thousands of people have tried, and the evidence is clear: The more you trade, the less you keep.

The distinction between investment and speculation in common stocks has always been a useful one and its disappearance is cause for concern.

It requires strength of character in order to think and to act in opposite fashion from the crowd and also patience to wait for opportunities that may be spaced years apart.

The function of the margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future.

For 99 issues out of 100 we could say that at some price they are cheap enough to buy and at some price they would be so dear that they would be sold.

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

The intelligent investor is likely to need considerable will power to keep from following the crowd.

The memory of the financial community is proverbially and distressingly short.

We have not known a single person who has consistently or lastingly make money by thus "following the market". We do not hesitate to declare this approach is as fallacious as it is popular.

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.

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.

If fees consume more than 1% of your assets annually, you should probably shop for another adviser.

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.

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.

It is our argument that a sufficiently low price can turn a security of mediocre quality into a sound investment opportunity - provided that the buyer is informed and experienced and he practices adequate diversification. For, if the price is low enough to create a substantial margin of safety, the security thereby meets our criterion of investment.

Knowledge is only one ingredient on arriving at a stock's proper price. The other ingredient, fully as important as information, is sound judgment.

We are convinced that the intelligent investor can derive satisfactory results from pricing of either type (market timing or fundamental analysis via price). We are equally sure that if he places his emphasis on timing, in the sense of forecasting, he will end up as a speculator and with a speculator's financial results." And "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.

You must never delude yourself into thinking that you're investing when you're speculating.

Evidently stockholders have forgotten more than to look at balance sheets. They have forgotten also that they are owners of a business and not merely owners of a quotation on the stock ticker. It is time, and high time, that the millions of American shareholders turned their eyes from the daily market reports long enough to give some attention to the enterprises themselves of which they are the proprietors, and which exist for their benefit and at their pleasure.

A speculator gambles that a stock will go up in price because somebody else will pay even more for it.

In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand.

Experience teaches that the time to buy stocks is when their price is unduly depressed by temporary adversity. In other words, they should be bought on a bargain basis or not at all.

Before you invest, you must ensure that you have realistically assessed your probability of being right and how you will react to the consequences of being wrong.