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

The purpose of this book is to supply, in the form suitable for laymen, guidance in the adoption and execution of an investment policy.

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.

Buy not on optimism, but on arithmetic.

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

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.

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.