Quotes About Benjamin Graham

In all of these instances he appears to be concerned with the intrinsic value of the security and more particularly with the discovery of discrepancies between the intrinsic value and the market price.

Lucent's stock, at $51.062 on June 30, 2000, finished 2002 at $1.26—a loss of nearly $190 billion in market value in two-and-a-half years.

Three solid books full of timely and specific examples are Martin Fridson and Fernando Alvarez's Financial Statement Analysis, Charles Mulford and Eugene Comiskey's The Financial Numbers Game, and Howard Schilit's Financial Shenanigans.

The intelligent investor dreads a bull market, since it makes stocks more costly to buy. And conversely (so long as you keep enough cash on hand to meet your spending needs), you should welcome a bear market, since it puts stocks back on sale.

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

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

In the previous four quarters, Yahoo! had racked up $433 million in revenues and $34.9 million in net income. So Yahoo!'s stock was now priced at 263 times revenues and 3,264 times earnings. (Remember that a P/E ratio much above 25 made Graham grimace!)5

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.

particularly as to whether they have a clear concept of the differences between investment and speculation and between market price and underlying value.

A price decline is of no real importance to the bona fide investor unless it is either very substantial- say, more than a third from cost- or unless it reflects a known deterioration of consequence in the company's position. p25

intelligent investor designates a tiny portion of her total portfolio as a "mad money" account. For most of us, 10% of our overall wealth is the maximum permissible amount to put at speculative risk. Never mingle the money in your speculative account with what's in your investment accounts; never allow your speculative thinking to spill over into your investing activities; and never put more than 10% of your assets into your mad money account, no matter what happens.

Conversely, sound procedure would call for reducing the common-stock component below 50% when in the judgment of the investor the market level has become dangerously high.

Security analysis, as a study, must necessarily concern itself as much as possible with principles and methods which are valid at all times—or, at least, under all ordinary conditions.

Benjamin Graham, the author of Security Analysis, a classic guide to investing.

By investing at a discount, Benjamin Graham knew that he was unlikely to experience losses.