Benjamin Graham Quotes
101 Benjamin Graham Quotes
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Security prices and yields are not determined by any exact mathematical calculation of the expected risk, but they depend rather upon the popularity of the issue.
Benjamin Graham
Very frequently, however, these appraisals [the value of a share] are based on mob, psychology, on faulty reasoning, and on the most superficial examination of inadequate information.
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
Analysis of the future should be penetrating rather than prophetic.
Benjamin Graham
This type of reasoning, it will be noted, lays emphasis not upon an accurate prediction of future trends but rather on reaching the general conclusion that the company will continue to do business pretty much as before.
Benjamin Graham
Exact [share] appraisal impossible. Security analysis cannot presume to lay down general rules as to the ‘proper value’ of any given common stock. Practically speaking, there is no such thing. The bases of value are too shifting to admit of any formulation that could claim to be even reasonably accurate. The whole idea of basing the value upon current earnings seems inherently absurd, since we know that the current earnings are constantly changing. And whether the multiplier should be ten or fifteen or thirty would seem at bottom a matter of purely arbitrary choice.
Benjamin Graham
It is proper to remark, moreover, that very few people are consistently wise or fortunate in their speculative operations.
Benjamin Graham
People who habitually purchase common stocks at more than about 20 times their average earnings are likely to lose considerable money in the long run.
Benjamin Graham
Low priced common stocks appear to possess an inherent arithmetical advantage arising from the fact they can advance so much more than they can decline. It is a common place of the securities market that an issue will rise more readily from 10 to 40 than from 100 to 400. This fact is due in part to the preferences of the speculative public, which generally is much more partial to issues in the 10 to 40 range than to those selling above 100.
Benjamin Graham
The absence of new competition, the withdrawal of old competition from the field and other natural economic forces may tend eventually to improve the situation and restore a normal rate of profit on the investment.
Benjamin Graham
The processes by which the securities market arrives at its appraisals are frequently illogical and erroneous. These processes are not automatic or mechanical but psychological, for they go on in the minds of people who buy and sell.
Benjamin Graham
The public would do well to remember that whenever it becomes easy to raise capital for a particular industry, both the chances of unfair deals are magnified and the danger of overdevelopment of the industry itself becomes very real.
Benjamin Graham
The mistakes of the market are thus the mistakes of groups or masses of individuals. Most of them can be traced to one or more of three basic causes: exaggeration, oversimplification or neglect.
Benjamin Graham
‘Catching the swings’ on a marginal basis impracticable.
Benjamin Graham
[Buying on margin] The outright owner can afford to buy too soon and to sell too soon. In fact he must expect to do both and to see the market decline farther after he buys and advance father after he sells out. But the margin trader is necessarily concerned with immediate results; he swims with the tide, hoping to gage the exact moment when the tide will turn and to reverse his stroke the moment before. In this he rarely succeeds, so that his typical experience is temporary success ending in complete disaster. It is the essential character of the speculator that he buys because he thinks stocks are going up not because they are cheap, and conversely when he sells. Hence there is a fundamental cleavage of viewpoint between the speculator and the securities analyst, which militates [Be a powerful or conclusive factor in preventing] strongly against any enduring satisfactory association between them.
Benjamin Graham
The stock speculator does suffer, in fact from a well-nigh incurable ailment: The cure he seeks, however is not abstinence from speculation but profits. Despite all experience, he persuades himself that these can be made and retained; he grasps greedily and uncritically at every plausible means to this end.
Benjamin Graham
The cardinal rule of the market analyst [trader] that losses should be cut short and profits should be safeguarded (by selling when a decline commences) leads in the direction of active trading. This means in turn that the cost of buying and selling becomes a heavily adverse factor in aggregate results. Operations based on security analysis are ordinarily of the investment type and do not involve active trading.
Benjamin Graham
Market analysis seems easier than security analysis, and it’s rewards may be realised much more quickly. For these very reasons, it is likely to prove more disappointing in the long run. There are no dependable ways of making money easily and quickly, either in Wall Street or anywhere else.
Benjamin Graham
[Trading in the market] It is fortunate for Wall Street as an institution that a small minority of people can trade successfully and that many others think they can. The accepted view holds that stock trading is like anything else; i.e. with intelligence and application, or with good professional guidance, profits can be realised. Our own opinion is sceptical, perhaps jaundiced. We think that, regardless of preparation and method, success in trading is either accidental and impermanent or else due to highly uncommon talent. Hence the vast majority of stock traders are inevitably doomed to failure. We do not expect this conclusion to have much effect on the public (Note our basic distinction between purchasing stocks at objectively low levels and selling them at high levels – which we term investment – and the popular practice of buying only when the market is ‘expected’ to advance and selling when it is ‘due’ to decline – which we call speculation.)
Benjamin Graham
In market analysis there are no margins of safety; you are either right or wrong, and if you are wrong, you lose money.
Benjamin Graham
[Buying stock in new or virtually new ventures] This we condemn unhesitatingly and with emphasis. The odds are so strongly against the man who buys into these new flotation’s that he might as well throw ¾’s of his money out of the window and keep the rest in the bank.
Benjamin Graham
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