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.

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

Calculate a stock's price/earnings ratio yourself, using Graham's formula of current price divided by average earnings over the past three years.

The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored.

The defensive (or passive) investor will place chief emphasis on the avoidance of serious mistakes or losses. His second aim will be freedom from effort, annoyance, and the need for making frequent decisions.

It is absurd to think that the general public can ever make money out of market forecasts.

As in roulette, same is true of the stock trader, who will find that the expense of trading weights the dice heavily against him.