Benjamin Graham Quotes & Sayings

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

The Reservoir system will function not only as an equalizer of business conditions, but also as a national store to meet further emergencies, such as war and drought, and-most important of all-as the concrete means of developing a steadily higher living standard for all. — Benjamin Graham

Do not let anyone else run your business — Benjamin Graham

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

Here is an all-too-brief summary of Buffett's approach: He looks for what he calls "franchise" companies with strong consumer brands, easily understandable businesses, robust financial health, and near-monopolies in their markets, like H & R Block, Gillette, and the Washington Post Co. Buffett likes to snap up a stock when a scandal, big loss, or other bad news passes over it like a storm cloud - as when he bought Coca-Cola soon after its disastrous rollout of "New Coke" and the market crash of 1987. He also wants to see managers who set and meet realistic goals; build their businesses from within rather than through acquisition; allocate capital wisely; and do not pay themselves hundred-million-dollar jackpots of stock options. Buffett insists on steady and sustainable growth in earnings, so the company will be worth more in the future than it is today. — Benjamin Graham

Nothing important on Wall Street can be counted on to occur exactly in the same way as it happened before. — Benjamin Graham

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. — Benjamin Graham

Objective tests of managerial ability are few and far from scientific. In most cases the investor must rely upon a reputation which may or may not be deserved. — Benjamin Graham

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

Instead of passing blithely over into that Promised Land, flowing almost literally with milk and honey, it may be our destiny to wander a full 40 years or more in the wilderness of doubt and divided sentiments. — Benjamin Graham

It's nonsensical to derive a price/earnings ratio by dividing the known current price by unknown future earnings. — Benjamin Graham

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. — Benjamin Graham

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

The intelligent investor shouldn't ignore Mr. Market entirely. Instead, you should do business with him- but only to the extent that it serves your interests. — Benjamin Graham

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

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. — Benjamin Graham

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. — Benjamin Graham

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. — Benjamin Graham

It is a fact worth pondering that four centuries ago the evil of "an abundance or surplus" arose from its being kept off the market, while today the evil of surplus lies in its being thrown upon the market. — Benjamin Graham

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

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. — Benjamin Graham

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. — Benjamin Graham

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. — Benjamin Graham

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. — Benjamin Graham

You will be much more in control, if you realize how much you are not in control. — Benjamin Graham

The modern world is not geared properly to the storage of goods. — Benjamin Graham

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. — Benjamin Graham

It is worth pointing out that assuredly not more than one person out of a hundred who stayed in the market after after 1925 emerged from it with a net profit and that the speculative losses taken were appalling. — Benjamin Graham

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

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. — Benjamin Graham

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. — Benjamin Graham

plant trees that other men will sit under. — Benjamin Graham

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. — Benjamin Graham

It is a misfortune of the times that all of us must needs be amateur economists-including, and perhaps especially, the professionals. — Benjamin Graham

When somebody asserts that a stock has an earning power of so much, I am sure that the person who hears him doesn't know what he means, and there is a good chance that the man who uses it doesn't know what it means. — Benjamin Graham

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. — Benjamin Graham

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

Outright speculation is neither illegal, immoral, nor (for most people) fattening to the pocketbook. More than that, some speculation is necessary and unavoidable, for in many common-stock situations there are substantial possibilities of both profit and loss, and the risks therein must be assumed by someone.* There is intelligent speculation as there is intelligent investing. But there are many ways in which speculation may be unintelligent. Of these the foremost are: (1) speculating when you think you are investing; (2) speculating seriously instead of as a pastime, when you lack proper knowledge and skill for it; and (3) risking more money in speculation than you can afford to lose. — Benjamin Graham

The market made up new standards as it went along, by accepting the current price - however high - as the sole measure of value. Any idea of safety based on this uncritical approach was clearly illusory and replete with danger. — Benjamin Graham

An investor calculates what a stock is worth, based on the value of its businesses. — Benjamin Graham

Perhaps many of the security analysts are handicapped by a flaw in their basic approach to the problem of stock selection. They seek the industries with the best prospects of growth, and the companies in these industries with the best management and other advantages. The implication is that they will buy into such industries and such companies at any price, however high, and they will avoid less promising industries and companies no matter how low the price of their shares. This would be the only correct procedure if the earnings of the good companies were sure to grow at a rapid rate indefinitely in the future, for then in theory their value would be infinite. And if the less promising companies were headed for extinction, with no salvage, the analysts would be right to consider them unattractive at any price. — Benjamin Graham

Many progressive economists insist that gold is now in essentially the same position as silver and that the arguments the simon-pure gold advocates use against the white metal can be directed with equal effect against their own fetish. — Benjamin Graham

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

December 20, 1999, Juno Online Services unveiled a trailblazing business plan: to lose as much money as possible, on purpose. Juno announced that it would henceforth offer all its retail services for free - no charge for e-mail, no charge for Internet access - and that it would spend millions of dollars more on advertising over the next year. On this declaration of corporate hara-kiri, Juno's stock roared up from $16.375 to $66.75 in two days.6 — Benjamin Graham

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

An investment operation is one that can be justified on both qualitative and quantitative grounds. — Benjamin Graham

Diversification is an established tenet of conservative investment. — Benjamin Graham

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

We shall dismiss these with the observation that their work does not concern "investors" as the term is used in this book. — Benjamin Graham

The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more.* Thus 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. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgment. — Benjamin Graham

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

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. — Benjamin Graham

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

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

... the value of the pledged property is vitally dependent on the earning power of the enterprise. — Benjamin Graham

And back in the spring of 1720, Sir Isaac Newton owned shares in the South Sea Company, the hottest stock in England. Sensing that the market was getting out of hand, the great physicist muttered that he "could calculate the motions of the heavenly bodies, but not the madness of the people." Newton dumped his South Sea shares, pocketing a 100% profit totaling £7,000. But just months later, swept up in the wild enthusiasm of the market, Newton jumped back in at a much higher price - and lost £20,000 (or more than $3 million in today's money). For the rest of his life, he forbade anyone to speak the words "South Sea" in his presence. 4 — Benjamin Graham

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". — Benjamin Graham

Whether we like it or not, government intervention in the face of surplus is here to stay. — Benjamin Graham

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. — Benjamin Graham

Good managements produce a good average market price, and bad managements produce bad market prices. — Benjamin Graham

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

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

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. — Benjamin Graham

... The soundness of the best investments must rest not upon legal rights or remedies but upon ample financial capacity of the enterprise. — Benjamin Graham

The trend is, in fact, a statement of future prospects in the form of an exact prediction. — Benjamin Graham

Both a priori reasoning and experience teach us that as as these funds grow larger the geometrical rate of growth by compound interest ultimately defeats itself. — Benjamin Graham

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. — Benjamin Graham

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

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

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. — Benjamin Graham

The world has not learned the technique of balanced expansion without the resultant commercial and financial congestion. — Benjamin Graham

In nine companies out of ten the factor of fluctuation has been a more dominant and important consideration in the matter of investment than has the factor of long-term growth or decline — Benjamin Graham

The determining trait of the enterprising (or active, or aggressive) investor is his willingness to devote time and care to the selection of securities that are both sound and more attractive than the average. — Benjamin Graham

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

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

The punches you miss are the ones that wear you out. - Boxing trainer Angelo Dundee — Benjamin Graham

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

The stock investor is neither right or wrong because others agreed or disagreed with him; he is right because his facts and analysis are right. — Benjamin Graham

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

The loss of public confidence in the financial community growing out of its own conduct in recent years. I insist that more damage has been done to stock values and to the future of equities from inside Wall Street than from outside Wall Street. — Benjamin Graham

The history of the past fifty years, and longer, indicates that a diversified holding of representative common stocks will prove more profitable over a stretch of years than a bond portfolio, with one important provisio that the shares must be purchased at reasonable market levels, that is, levels that are reasonable in the light of fairly well-defined standards derived from past experience. — Benjamin Graham

If we assume that there are normal or standard income results to be obtained from investing money in securities, then the role of the adviser can be more readily established. He will use his superior training and experience to protect his clients against mistakes and to make sure that they obtain the results to which their money is entitled. — Benjamin Graham

The utility, or intrinsic value of gold as a commodity is now considerably less than in the past; its monetary status has become extraordinarily ambiguous; and its future is highly uncertain. — Benjamin Graham

... generally speaking there can be no high-grade obligations of a weak enterprise. — Benjamin Graham

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. — Benjamin Graham

Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains. — Benjamin Graham

It is our view that stock-market timing cannot be done, with general success, unless the time to buy is related to an attractive price level, as measured by analytical standards. Similarly, — Benjamin Graham

Undervaluations caused by neglect or prejudice may persist for an inconveniently long time, and the same applies to inflated prices caused by over-enthusiasm or artificial stimulants. — Benjamin Graham

The idea of storage as a solution of economic problems at least has the support of common sense.It is diametrically opposed to the topsy-turvy Alice-in-Wonderland reasoning that has marked so much of our depression thinking and policy. — Benjamin Graham

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. — Benjamin Graham

Both individual skill (art) and chance are important factors in determining success or failure. — Benjamin Graham

The psychologists Daniel Kahnerman and Amos Tversky have shown when humans estimate the likelihood or frequency of an event, we make that judgment based not on how often the event has actually occurred, but on how vivid the past examples are. — Benjamin Graham

Among the things that should make your antennae twitch are technical terms like "capitalized," "deferred," and "restructuring" - and plain-English words signaling that the company has altered its accounting practices, like "began," "change," and — Benjamin Graham

The chief obstacle to success lies in the stubborn fact that if the favorable prospects of a concern are clearly apparent they are almost always reflected already in the current price of the stock. Buying such an issue is like betting on a topheavy favorite in a horse race. The chances may be on your side, but the real odds are against you. — Benjamin Graham

Analysis is concerned primarily with values which are supported by the facts and not with those which depend largely upon expectations. — Benjamin Graham

It must be fundamentally wrong to reduce production of food and fiber while one-third of our population is still ill fed and ill clothed. — Benjamin Graham

It is our argument that a sufficiently low price can turn a security of mediocre quality into a sound investment opportunity - provided that the buyer is informed and experienced and he practices adequate diversification. For, if the price is low enough to create a substantial margin of safety, the security thereby meets our criterion of investment. — Benjamin Graham

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

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. — Benjamin Graham

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