Value Investing Quotes: 25 Pages Of The Best

Graham

“An investment operation is one which, upon thorough analysis, promises safety of principal and adequate return. Operations not meeting these requirements are speculative.”
“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.”
“Stocks will fluctuate substantially in value. For a true investor, the only significant meaning of price fluctuations is that they offer … an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal.”
“You are neither right nor wrong because the crowd disagrees with you. You are right (or wrong) because your data and reasoning are right (or wrong).”
“The one principle 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.”
“To have a true investment, there must be 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.”

“A large advance in the stock market is basically a sign for caution and not a reason for confidence.” – Ben Graham[75]

“In my nearly fifty years of experience in Wall Street I’ve found that I know less and less about what the stock market is doing to do but I know more and more about what investors ought to do; and that’s a pretty vital change in attitude. The first point is that the investor is required by the very insecurity ruling in the world of today to maintain at all times some division of his funds between bonds and stocks (cash and various types of interest-bearing deposits may be viewed as bond-equivalents). My suggestion is that the minimum position of this portfolio held in common stocks should be 25% and the maximum should be 75%. Consequently the maximum holding of bonds would be 75% and the minimum 25% – the figures being reversed. Any variations made in his portfolio mix should be held within these 25% and 75% figures. Any such variations should be clearly based on value considerations, which would lead him to own more common stocks when the market seems low in relation to value and less common stocks when the market seems high in relation to value.” – Ben Graham[76] [emphasis added]

“If you believe that the value approach is inherently sound then devote yourself to that principle. Stick to it, and don’t be led astray by Wall Street’s fashions, illusions and its constant chase after the fast dollar. Let me emphasize that it does not take genius to be a successful value analyst, what it needs is, first, reasonably good intelligence; second, sound principles of operation; and third, and most important, firmness of character.” – Ben Graham[77]

“The extraordinary thing about the securities market, if you judge it over a long period of years, is the fact that it does not go off on tangents permanently, but it remains in continuous orbit. When I say that it doesn’t go off on tangents, I mean the simple point that after the stock market goes up a great deal it not only comes down a great deal but it comes down to levels to which we had previously been accustomed. Thus we have never found the stock market has a whole going off into new areas and staying there permanently because there has been a permanent change in the basic conditions.” – Ben Graham[78]

“I am more and more impressed with the possibilities of history’s repeating itself on many different counts. You don’t get very far in Wall Street with the simple, convenient conclusion that a given level of prices is not too high. It may be that a great deal of water will have to go over the dam before a conclusion of that kind works itself out in terms of a satisfactory experience. That is why in this course we have tried to emphasize as much as possible the obtaining of specific insurance against adverse developments by trying to buy securities that are not only not too high but that, on the basis of analysis, appear to be very much too low. If you do that, you always have the right to say to yourself that you are out of the security market, and you are an owner of part of a company on attractive terms.” – Ben Graham[79]

“Investors do not make mistakes, or bad mistakes, in buying good stocks as fair prices. They make their most serious mistakes by buying poor stocks, particularly the ones that are pushed for various reasons. And sometimes – in fact, very frequently – they make mistakes by buying good stocks in the upper reaches of a bull market.” – Ben Graham[80]

“The thing that you would be naturally led into, if you are value-minded, would be the purchase of individual securities that are undervalued at all stages of the security market. That can be done successfully, and should be done – with one proviso, which is that it is not wise to buy undervalued securities when the general market seems very high. That is a particularly difficult point to get across: For superficially it would seem that a high market is just the time to buy the undervalued securities, because their undervaluation seems most apparent then. Peculiarly enough, experience shows that is not true. In all probability the [undervalued] stock will also decline sharply in a price break. Don’t forget that if some [undervalued] company sells at less than your idea of value, it sells so because it is not popular; and it is not going to get more popular during periods when the market is declining considerably. Its popularity tends to decrease along with the popularity of stocks generally. If you are pretty sure that the market is too high, it is a better policy to keep your money in cash or government bonds than it is to put it in bargain stocks. However, at other times – and that is most of the time, of course – the field of undervalued securities is profitable and suitable for analysts’ activities.” – Ben Graham[81]

“The older and more experienced I get the less confidence I have in judgmental choice as distinct from the figures themselves.” – Ben Graham[82]

Warren Buffett

“The chains of habit are too light to be felt until they are too heavy to be broken.”
“I don’t look to jump over 7-foot bars: I look around for 1-foot bars that I can step over.”
“If a business does well, the stock eventually follows.”
“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.”
“If past history was all there was to the game, the richest people would be librarians.”
“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”
“The investor of today does not profit from yesterday’s growth.”
“We believe that according the name ‘investors’ to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a ‘romantic.’”
“We’re still in a recession. We’re not gonna be out of it for a while, but we will get out.”
“Risk comes from not knowing what you’re doing.”
“Forecasts usually tell us more of the forecaster than the future.”
“We try to buy businesses with good-to-superb underlying economics run by honest and able people and buy them at sensible prices. That’s all I’m trying to do.”