For 99 issues out of 100 we could say that at some price they are cheap enough to buy and at some price they would be so dear that they would be sold.
The distinction between investment and speculation in common stocks has always been a useful one and its disappearance is cause for concern.
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.
The qualitative factors upon which most stress is laid are the nature of the business and the character of the management. These elements are exceedingly important, but they are also exceedingly difficult to deal with intelligently.
Never mingle your speculative and investment operations in the same account nor in any part of your thinking.
We have not known a single person who has consistently or lastingly made money by thus “following the market”. We do not hesitate to declare this approach as fallacious as it is popular.
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”.
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.
Knowledge is only one ingredient on arriving at a stock’s proper price. The other ingredient, fully as important as information, is sound judgment.
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.
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.
An intelligent investor gets satisfaction from the thought that his operations are exactly opposite to those of the crowd.
The sillier the market’s behavior, the greater the opportunity for the business-like investor.
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.
The purpose of this book is to supply, in the form suitable for laymen, guidance in the adoption and execution of an investment policy.
A speculator gambles that a stock will go up in price because somebody else will pay even more for it.
Confusing speculation with investment is always a mistake.
The most striking thing about Graham’s discussion of how to allocate your assets between stocks and bonds is that he never mentions the word “age”.
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.
There is a close logical connection between the concept of a safety margin and the principle of diversification.