Benjamin Graham quotes page 1
1894 - 1976, American investor
The chief losses to investors come from the purchase of low-quality securities at times
favorable business conditions.
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 likely to need considerable willpower to keep from following the
The one principal that applies to nearly all these so-called "technical approaches" is that one
should buy because a stock or the market has gone up and one should sell because it has
declined. This is the exact opposite of sound business sense everywhere else, and it is most
unlikely that it can lead to lasting success in Wall Street. In our own stock-market experience
and observation, extending over 50 years, 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 that this approach is as fallacious as it is popular.
While enthusiasm may be necessary for great accomplishments elsewhere, on Wall Street it
almost invariably leads to disaster.
There are two requirements for success in Wall Street. One - you have to think correctly;
and secondly you have to think independently.
I quickly convinced myself that the true key to happiness lay in a modest standard of living
which could be achieved with little difficulty under almost all economic conditions.
It is absurd to think that the general public can ever make money out of market forecasts.
Wall Street has a few prudent principles; the trouble is that they are always forgotten when
they are most needed.
The moral seems to be that any approach to money making in the stock market which can be
easily described and followed by a lot of people is by its terms too simple and too easy to last.
An investment is based on incisive, quantitative analysis, while speculation depends on whim
Wall Street people learn nothing and forget everything.
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
The investor's chief problem – and even his worst enemy – is likely to be himself.
To achieve satisfactory investment results is easier than most people realize; to achieve
superior results is harder than it looks.
Most of the time 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 vast majority of stock traders are inevitably doomed to failure.
Have the courage of your knowledge and experience. If you have formed a conclusion from
the facts and if you know your judgement is sound, act on it – even though others may
hesitate or differ.
You are neither right nor wrong because the crowd disagrees with you. You are right because
your data and reasoning are right.
In market analysis there are no margins of safety; you are either right or wrong, and if you
are wrong, you lose money.
Analysis of the future should be penetrating rather than prophetic.
The essence of investment management is the management of risks, not the management of
The more the investor depends on his portfolio and the income therefrom, the more necessary
it is for him to guard against the unexpected and the disconcerting in this part of his life.
If the share price advances, it is because most investors expect earnings to grow.
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.
There is no sure and easy path to riches in Wall Street or anywhere else.
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. At other times he will do better if he forgets about the stock market
and pays attention to his dividend returns and to the operating results of his companies.
Abnormally good or abnormally bad conditions do not last forever.
Much as the investor would like to be able to buy at just the right time and to sell out when
prices are about to fall, experience shows that he is not likely to be brilliantly successful in
such efforts and that by injecting the trading element into his investment operations he will
disrupt the income return on his capital and inevitably shift his interest into speculative
If you want to speculate do so with your eyes open, knowing that you will probably lose
money in the end; be sure to limit the amount at risk and to separate it completely from your