Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.
The punches you miss are the ones that wear you out. – Boxing trainer Angelo Dundee.
Buy cheap and sell dear.
A cynic once told G. K. Chesterton, the British novelist and essayist, “Blessed is he who expecteth nothing, for he shall not be disappointed.” Chesterton’s rejoinder? “Blessed is he who expecteth nothing, for he shall enjoy everything.
You will be much more in control, if you realize how much you are not in control.
You’ve got to be careful if you don’t know where you’re going, ’cause you might not get there. – Yogi Berra.
An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.
While a trend shown in the past is a fact, a “future trend” is only an assumption.
Astute observers of corporate balance sheets are often the first to see business deterioration.
Since the profits that companies can earn are finite, the price that investors should be willing to pay for stocks must also be finite.
The most dangerous untruths are truths slightly distorted. – G. C. Lichtenberg.
All things excellent are as difficult as they are rare.
An elementary requirement for the intelligent investor is an ability to resist the blandishments of salesmen offering new common-stock issues during bull markets.
It requires a great deal of boldness and a great deal of caution to make a great fortune; and when you have got it, it requires ten times as much wit to keep it. – Nathan Mayer Rothschild.
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. In the end, what matters isn’t crossing the finish line before anybody else but just making sure that you do cross it.8.
The Interborough issues are an example of a rather special group of situations in which analysis may reach more definite conclusions respecting intrinsic value than in the ordinary case. These situations may involve a liquidation or give rise to technical operations known as “arbitrage” or “hedging.
I feel grateful to the Milesian wench who, seeing the philosopher Thales continually spending his time in contemplation of the heavenly vault and always keeping his eyes raised upward, put something in his way to make him stumble, to warn him that it would be time to amuse his thoughts with things in the clouds when he had seen to those at his feet. Indeed she gave him or her good counsel, to look rather to himself than to the sky. – Michel de Montaigne.
The heart of Graham’s argument is that the intelligent investor must never forecast the future exclusively by extrapolating the past.
The intelligent investor will remember the wise words of financial analyst Mark Schweber: “The one question never to ask a bureaucrat is ‘Why?
But make sure you remember this: The people who now claim that the next “sure thing” will be health care, or energy, or real estate, or gold, are no more likely to be right in the end than the hypesters of high tech turned out to be.
Hold an index fund for 20 years or more, adding new money every month, and you are all but certain to outper-forms the vast majority of professional and individual investors alike. Late in his life, Graham praised index funds as the best choice for individual investors, as does Warren Buffett.6.