Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.

An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return.

Real investment risk is measured not by the percent that a stock may decline in price in relation to the general market in a given period, but by the danger of a loss of quality and earnings power through economic changes or deterioration in management.

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

Losing some money is an inevitable part of investing, and there's nothing you can do to prevent it. But to be an intelligent investor, you must take responsibility for ensuring that you never lose most or all of your money.

Investing is most intelligent when it is most businesslike.

We have been trying to point out that this concept of an indefinitely favorable future is dangerous, even if it is true; because even if it is true you can easily overvalue the security, since you make it worth anything you want it to be worth. Beyond this, it is particularly dangerous too, because sometimes your ideas of the future turn out to be wrong. Then you have paid an awful lot for a future that isn't there. Your position then is pretty bad.