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.

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.

The investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage.

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.

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

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

The investor's chief problem - and even his worst enemy - is likely to be himself.