Quotes About Finance

the value of the pledged property is vitally dependent on the earning power of the enterprise.

Instead, calculate a stock's price/earnings ratio yourself, using Graham's formula of current price divided by average earnings over the past three years.

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.

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.

It is no difficult trick to bring a great deal of energy, study, and native ability into Wall Street and to end up with losses instead of profits. These virtues, if channeled in the wrong directions, become indistinguishable from handicaps.

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.

Se você não tem como prever o comportamento dos mercados, precisa aprender a prever e controlar o seu próprio.

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.

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

But the intelligent investor has no interest in being temporarily right. To reach your long-term financial goals, you must be sustainably and reliably right.

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

High valuations entail high risks.

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

Graham's definition of investing could not be clearer: "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return."1 Note

you must deliberately protect yourself against serious losses; you must aspire to "adequate," not extraordinary, performance.

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.

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 intelligent investor will remember the wise words of financial analyst Mark Schweber: "The one question never to ask a bureaucrat is 'Why?

The ideal way to dollar-cost average is into a portfolio of index funds, which own every stock or bond worth having. That way, you renounce not only the guessing game of where the market is going but which sectors of the market—and which particular stocks or bonds within them—will do the best.