Quotes About Risk

the really dreadful losses" always occur after "the buyer forgot to ask 'How much?'" Most painfully of all, by losing their self-control just when they needed it the most, these people proved Graham's assertion that "the investor's chief problem—and even his worst enemy—is likely to be himself.

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

just as in 1929 the companion theory for the "blue chips" was that no price was too high for them because their future possibilities were limitless.

Thus, in sum, we say that to have a true investment there must be present 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.

Principle of Optimum Capitalization Structure.

You should always remember, in the words of psychologist Paul Slovic, that risk is brewed from an equal dose of two ingredients - probabilities and consequences. 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.

investors are constitutionally averse to buying into a troubled situation.

They ignored Graham's warning that "the really dreadful losses" always occur after "the buyer forgot to ask 'How much?'" Most painfully of all, by losing their self-control just when they needed it the most, these people proved Graham's assertion that "the investor's chief problem—and even his worst enemy—is likely to be himself.

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.

A strong-minded approach to investment, firmly based on the margin-of-safety principle, can yield handsome rewards. But a decision to try for these emoluments rather than for the assured fruits of defensive investment should not be made without much self-examination.

this book will teach you three powerful lessons: how you can minimize the odds of suffering irreversible losses; how you can maximize the chances of achieving sustainable gains; how you can control the self-defeating behavior that keeps most investors from reaching their full potential.

don't invest in only one stock—or even just a handful of different stocks. Unless you are not willing to spread your bets, you shouldn't bet at all. Graham's guideline of owning between 10 and 30 stocks remains a good starting point for investors who want to pick their own stocks, but you must make sure that you are not overexposed to one industry.

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

And I suspect that Graham and Dodd have been ignored by those who suffer from the misconception that trying to make serious money requires that one take serious risks.

An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return."1 Note that investing, according to Graham, consists equally of three elements:

1. There should be adequate though not excessive diversification. This might mean a minimum of ten different issues and a maximum of about thirty.†

Without a saving faith in the future, no one would ever invest at all.

day trading—holding stocks for a few hours at a time—is one of the best weapons ever invented for committing financial suicide.

Quien se conforme con ganancias seguras, difícilmente llegará a amasar grandes riquezas; quien lo fíe todo a grandes aventuras, frecuentemente quebrará y caerá en la pobreza: es bueno, por lo tanto, proteger las aventuras con los frutos de la certidumbre para que puedan soportar las pérdidas. Sir Francis Bacon

The intelligent investor dreads a bull market, since it makes stocks more costly to buy.

The story is simple enough. Some of those in charge set out to get much better than average (or DJIA) results. They succeeded in doing this for a while, garnering considerable publicity and additional funds to manage. The aim was legitimate enough; unfortunately, it appears that, in the context of investing really sizable funds, the aim cannot be accomplished without incurring sizable risks. And in a comparatively short time the risks came home to roost.

The longer the bull market lasts the more severely investors will be affected with amnesia; after five years or so, many people no longer believe that bear markets are possible.

Today's investor is so concerned with anticipating the future that he is already paying handsomely for it in advance. Thus what he has projected with so much study and care may actually happen and still not bring him any profit. If it should fail to materialize to the degree expected he may in fact be faced with serious temporary and perhaps even permanent loss.

As Graham puts it, "while enthusiasm may be necessary for great accomplishments elsewhere, on Wall Street it almost invariably leads to disaster.