Benjamin graham quotes

People who invest make money for themselves; people who speculate make money for their brokers. And that, in turn, is why Wall Street perennially downplays the durable virtues of investing and hypes the gaudy appeal of speculation.

By developing your discipline and courage, you can refuse to let other people's mood swings govern your financial destiny. In the end, how your investments behave is much less important than how you behave.

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

Unusually rapid growth cannot keep up forever; when a company has already registered a brilliant expansion, its very increase in size makes a repetition of its achievement more difficult.

Nearly everyone interested in common stocks wants to be told by someone else what he thinks the market is going to do. The demand being there, it must be supplied.

Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble... to give way to hope, fear and greed.

The market is always making mountains out of molehills and exaggerating ordinary vicissitudes into major setbacks.

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.

Experience teaches that the time to buy stocks is when their price is unduly depressed by temporary adversity. In other words, they should be bought on a bargain basis or not at all.

The intelligent investor is a realist who sells to optimists and buys from pessimists.

The best way to measure your investing success is not by whether you're beating the market but by whether you've put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.

At heart, "uncertainty" and "investing" are synonyms.

Do not let anyone else run your business

Wall Street people learn nothing and forget everything.

Speculators often prosper through ignorance; it is a cliché that in a roaring bull market knowledge is superfluous and experience is a handicap. But the typical experience of the speculator is one of temporary profit and ultimate loss

The genuine investor in common stocks does not need a great equipment of brain and knowledge, but he does need some unusual qualities of character

Evidently stockholders have forgotten more than to look at balance sheets. They have forgotten also that they are owners of a business and not merely owners of a quotation on the stock ticker. It is time, and high time, that the millions of American shareholders turned their eyes from the daily market reports long enough to give some attention to the enterprises themselves of which they are the proprietors, and which exist for their benefit and at their pleasure.

Investing isn't about beating others at their game. It's about controlling yourself at your own game.

Though business conditions may change, corporations and securities may change, and financial institutions and regulations may change, human nature remains the same. Thus the important and difficult part of sound investment, which hinges upon the investor's own temperament and attitude, is not much affected by the passing years.

In the short run, the market is a voting machine, but in the long run it is a weighing machine.

you may take it as an axiom that you cannot profit in Wall Street by continuously doing the obvious or the popular thing

Have the courage of your knowledge and experience. If you have formed a conclusion from the facts and if you know your judgment is sound, act on it – even though others may hesitate or differ.

Individuals who cannot master their emotions are ill-suited to profit from the investment process.

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

The intelligent investor should recognize that market panics can create great prices for good companies and good prices for great companies.

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

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.

In most cases the favorable price performance will be accompanied by a well-defined improvement in the average earnings, in the dividend, and in the balance-sheet position. Thus in the long run the market test and the ordinary business test of a successful equity commitment tend to be largely identical.

Successful investing is about managing risk, not avoiding it.

A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.

we have complaints that institutional dominance of the stock market has put 'the small investor at a disadvantage because he can't compete with the trust companies' huge resources, etc. The facts are quite the opposite. It may be that the institutions are better equipped than the individual to speculate in the market.But I am convinced that an individual investor with sound principles, and soundly advised, can do distinctly better over the long pull than large institutions.

High valuations entail high risks.

The margin of safety is always dependent on the price paid. It will be large at one price, small at some higher price, nonexistent at some still higher price.

The best values today are often found in the stocks that were once hot and have since gone cold.

Mr. Market's job is to provide you with prices; your job is to decide whether it is to your advantage to act on them. You no not have to trade with hime just because he constantly begs you to.

The true investor... will do better if he forgets about the stock market and pays attention to his dividend returns and to the operation results of his companies.

Before you invest, you must ensure that you have realistically assessed your probability of being right and how you will react to the consequences of being wrong.

In the old legend the wise men finally boiled down the history of mortal affairs into a single phrase: 'This too will pass.'

The investor is neither smart not richer when he buys in an advancing market and the market continues to rise. That is true even when he cashes in a goodly profit, unless either (a) he is definitely through with buying stocks an unlikely story or (b) he is determined to reinvest only at considerably lower levels. In a continuous program no market profit is fully realized until the later reinvestment has actually taken place, and the true measure of the trading profit is the difference between the previous selling level and the new buying level.

Thousands of people have tried, and the evidence is clear: The more you trade, the less you keep.

If I have noticed anything over these 60 years on Wall Street, it is that people do not succeed in forecasting what`s going to happen to the stock market.

A price decline is of no real importance to the bona fide investor unless it is either very substantial say, more than a third from cost or unless it reflects a known deterioration of consequence in the company's position. In a well-defined bear market many sound common stocks sell temporarily at extraordinary low prices. It is possible that the investor may then have a paper loss of fully 50 per cent on some of his holdings, without any convincing indication that the underlying values have been permanently affected.

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.

Mathematics is ordinarily considered as producing precise and dependable results; but in the stock market the more elaborate and abstruse the mathematics the more uncertain and speculative are the conclusions we draw there from. Whenever calculus is brought in, or higher algebra, you could take it as a warning that the operator was trying to substitute theory for experience, and usually also to give to speculation the deceptive guise of investment.

If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.

A speculator gambles that a stock will go up in price because somebody else will pay even more for it.

Intelligent investment is more a matter of mental approach than it is of technique. A sound mental approach toward stock fluctuations is the touchstone of all successful investment under present-day conditions.

Investing is most intelligent when it is most businesslike.

The function of the margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future.

To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.

To have a true investment, there must be a true margin of safety. And a true margin of safety is one that can be demonstrated by figures, by persuasive reasoning, and by reference to a body of actual experience.

The stock market resembles a huge laundry in which institutions take in large blocks of each others washing ... without rhyme or reason.

No matter how careful you are, the one risk no investor can ever eliminate is the risk of being wrong. Only by insisting on what Graham called the "margin of safety" - never overpaying, no matter how exciting an investment seems to be - can you minimize your odds of error.

Although there are good and bad companies, there is no such thing as a good stock; there are only good stock prices, which come and go.

It should be remembered that a decline of 50% fully offsets a preceding advance of 100%.

The volume of credit depends upon three factors: the desire to borrow, the ability to lend and the desire to lend.

We urge the beginner in security buying not to waste his efforts and his money in trying to beat the market. Let him study security values and initially test out his judgment on price versus value with the smallest possible sums.

The thing that I have been emphasizing in my own work for the last few years has been the group approach. To try to buy groups of stocks that meet some simple criterion for being undervalued-regardless of the industry and with very little attention to the individual company.

Price statistics show clearly that instability in raw-material prices is a prime cause of instability of other prices.

Never buy a stock because it has gone up or sell one because it has gone down.

The individual investor should act consistently as an investor and not as a speculator. This means ... that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money's worth for his purchase.

If fees consume more than 1% of your assets annually, you should probably shop for another adviser.

The investor's primary interest lies in acquiring and holding suitable securities at suitable prices.

Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.

Always remember that market quotations are there for convenience, either to be taken advantage of or to be ignored.

A great company is not a great investment if you pay too much for the stock.

To be an investor you must be a believer in a better tomorrow.

In the financial markets, hindsight is forever 20/20, but foresight is legally blind. And thus, for most investors, market timing is a practical and emotional impossibility.

The story of Joseph in Egypt and of the seven fat and the seven lean years has passed into the homely wisdom of the ages; but our economic thinking seems to have lost contact with so simple and basic approach to prudent management of a nations welfare.

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.

The underlying principles of sound investment should not alter from decade to decade, but the application of these principles must be adapted to significant changes in the financial mechanisms and climate.

Whenever the investor sold out in an upswing as soon as the top level of the previous well-recognized bull market was reached, he had a chance in the next bear market to buy back at one third (or better) below his selling price.

The intelligent investor is likely to need considerable will power to keep from following the crowd.

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

Buy not on optimism, but on arithmetic.

The purchase of a bargain issue presupposes that the market's current appraisal is wrong, or at least that the buyer's idea of value is more likely to be right than the market's. In this process the investor sets his judgement against that of the market. To some this may seem arrogant or foolhardy.

By refusing to pay too much for an investment, you minimize the chances that your wealth will ever disappear or suddenly be destroyed.

You must never delude yourself into thinking that you're investing when you're speculating.

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

Confusing speculation with investment is always a mistake.

The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell.

Successful investing professionals are disciplined and consistent and they think a great deal about what they do and how they do it.

The sillier the market's behavior, the greater the opportunity for the business like investor.

Abnormally good or abnormally bad conditions do not last forever.

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.

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

We are convinced that the intelligent investor can derive satisfactory results from pricing of either type (market timing or fundamental analysis via price). We are equally sure that if he places his emphasis on timing, in the sense of forecasting, he will end up as a speculator and with a speculator's financial results." And "The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices.

It is no difficult trick to bring a great deal of energy, study, and native ability into Wall Street and to end up with losses instead of profits. These virtues, if channeled in the wrong directions, become indistinguishable from handicaps.

The value of any investment is, and always must be, a function of the price you pay for it.

THERE is widespread agreement among economists that abuse of credit constitutes one of the chief unwholesome elements in business booms and is mainly responsible for the ensuing crash and depression.

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.

The memory of the financial community is proverbially and distressingly short.

The intelligent investor gets interested in big growth stocks not when they are at their most popular - but when something goes wrong.

Most businesses change in character and quality over the years, sometimes for the better, perhaps more often for the worse. The investor need not watch his companies' performance like a hawk; but he should give it a good, hard look from time to time.

An intelligent investor gets satisfaction from the thought that his operations are exactly opposite to those of the crowd.

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.

Stocks can be dynamite.

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

No statement is more true and better applicable to Wall Street than the famous warning of Santayana: "Those who do not remember the past are condemned to repeat it".

It requires strength of character in order to think and to act in opposite fashion from the crowd and also patience to wait for opportunities that may be spaced years apart.

All the real money in investment will have to be made as most of it has been in the past not out of buying and selling but out of owning and holding securities, receiving interests and dividends therein, and benefiting from their long-term increases in value. Hence stockholder's major energies and wisdom as investors should be directed toward assuring themselves of the best operating results from their corporations. This in turn means assuring themselves of fully honest and competent managements.

A defensive investor can always prosper by looking patiently and calmly through the wreckage of a bear market.

In the short-run, the market is a voting machine - reflecting a voter-registration test that requires only money, not intelligence or emotional stability - but in the long- run, the market is a weighing machine.

The chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

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.

Since we have emphasized that analysis will lead to a positive conclusion only in the exceptional case, it follows that many securities must be examined before one is found that has real possibilities for the analyst. By what practical means does he proceed to make his discoveries? Mainly by hard and systematic work.

The essence of investment management is the management of risks, not the management of returns.

It always seemed, and still seems, ridiculously simple to say that if one can acquire a diversified group of common stocks at a price less than the applicable net current assets alone - after deducting all prior claims, and counting as zero the fixed and other assets - the results should be quite satisfactory.

Traditionally the investor has been the man with patience and the courage of his convictions who would buy when the harried or disheartened speculator was selling.

The art of investment has one characteristic that is not generally appreciated. A creditable, if unspectacular, result can be achieved by the lay investor with a minimum of effort and capability; but to improve this easily attainable standard requires much application and more than a trace of wisdom. If you merely try to bring just a little extra knowledge and cleverness to bear upon your investment program, instead of realizing a little better than normal results, you may well find that you have done worse.

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

Never mingle your speculative and investment operations in the same account nor in any part of your thinking.

The beauty of periodic rebalancing is that it forces you to base your investing decisions on a simple, objective standard.

The only thing you should do with pro forma earnings is ignore them.

The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists.

Always buy your straw hats in the Winter

Stock speculation is largely a matter of A trying to decide what B, C and D are likely to think-with B, C and D trying to do the same.

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

In an ideal world, the intelligent investor would hold stocks only when they are cheap and sell them when they become overpriced, then duck into the bunker of bonds and cash until stocks again become cheap enough to buy.

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.

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.

While enthusiasm may be necessary for great accomplishments elsewhere, on Wall Street it almost invariably leads to disaster

To see how much a company is truly earning on the capital it deploys in its businesses, look beyond EPS to Return on Invested Capital (ROIC).

Knowledge is only one ingredient on arriving at a stock's proper price. The other ingredient, fully as important as information, is sound judgment.

I quickly convinced myself that the true key to material happiness lay in a modest standard of living which could be achieved with little difficulty under almost all economic conditions.