In the world of securities, courage becomes the supreme virtue after adequate knowledge and a tested judgment are at hand.
We have not known a single person who has consistently or lastingly make money by thus "following the market". We do not hesitate to declare this approach is as fallacious as it is popular.
The stock market resembles a huge laundry in which institutions take in large blocks of each others washing ... without rhyme or reason.
Though business conditions may change, corporations and securities may change, and financial institutions and regulations may change, human nature remains the same. Thus the important and difficult part of sound investment, which hinges upon the investor's own temperament and attitude, is not much affected by the passing years.
In the old legend the wise men finally boiled down the history of mortal affairs into a single phrase: 'This too will pass.'
If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume.
The investor's primary interest lies in acquiring and holding suitable securities at suitable prices.
An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return.
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.
It is absurd to think that the general public can ever make money out of market forecasts.
High valuations entail high risks.
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.
Unusually rapid growth cannot keep up forever; when a company has already registered a brilliant expansion, its very increase in size makes a repetition of its achievement more difficult.
Most of the time common 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 purchase of a bargain issue presupposes that the market's current appraisal is wrong, or at least that the buyer's idea of value is more likely to be right than the market's. In this process the investor sets his judgement against that of the market. To some this may seem arrogant or foolhardy.
A speculator gambles that a stock will go up in price because somebody else will pay even more for it.
The genuine investor in common stocks does not need a great equipment of brain and knowledge, but he does need some unusual qualities of character
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.
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".
Whenever the investor sold out in an upswing as soon as the top level of the previous well-recognized bull market was reached, he had a chance in the next bear market to buy back at one third (or better) below his selling price.
The function of the margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future.
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.
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.
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.
An investor calculates what a stock is worth, based on the value of its businesses.
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