High valuations entail high risks.

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.

In other words, the market is not a weighing machine, on which the value of each issue is recorded by an exact and impersonal mechanism, in accordance with its specific qualities. Rather should we say that the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion.

The ideal form of common stock analysis leads to a valuation of the issue which can be compared with the current price to determine whether or not the security is an attractive purchase.

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

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

Speculative stock movements are carried too far in both directions, frequently in the general market and at all times in at least some of the individual issues.