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.

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.

Both individual skill (art) and chance are important factors in determining success or failure.

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of good business conditions. The purchasers view the good current earnings as equivalent to 'earning power' and assume that prosperity is equivalent to safety.

There is a close logical connection between the concept of a safety margin and the principle of diversification.

Every corporate security may be best viewed, in the first instance, as an ownership interest in, or a claim against, a specific business enterprise.

Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains.