Every investment is the present value of all future cash flow.
Benjamin Graham, colleague and mentor to billionaire investor Warren Buffett, is widely acknowledged as the father of value investing. His timeless book, The Intelligent Investor, is considered the value investor’s bible for both individual investors and Wall Street professionals.
Many of Benjamin Graham’s concepts are deemed fundamental for value investors, and his concepts should be studied and followed for anyone who plans to invest long term in the stock market.
For example, “Margin of Safety” is the famous term coined by Ben Graham. In simple terms, an asset worth $100 and bought at $80 has a better Margin of Safety than the same asset purchased at $95. In other words, “A great company is not a great investment if you pay too much for the stock”, according to Benjamin Graham.
Who is Benjamin Graham? He is Known as the Godfather of Value Investing. #ValueInvesting https://t.co/bJh72dC6zW
— Cabot Wealth Network (@CabotAnalysts) March 6, 2022
The 10 Benjamin Graham quotes, all of which are valuable in today’s market, tell us that::
- “A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.”
- “People who invest make money for themselves; people who speculate make money for their brokers.”
- “While enthusiasm may be necessary for great accomplishments elsewhere, on Wall Street, it almost invariably leads to disaster.”
- “Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal.”
- “Obvious prospects for physical growth in a business do not translate into obvious profits for investors.”
- “An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
- “To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.”
- “The intelligent investor is a realist who sells to optimists and buys from pessimists.”
- “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. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons’ mistakes of judgment.”
- “Weighing the evidence objectively, the intelligent investor should conclude that IPO does not stand only for ‘initial public offering.’ More accurately, it is also shorthand for: It’s Probably Overpriced, Imaginary Profits Only, Insiders’ Private Opportunity, or Idiotic, Preposterous, and Outrageous.”
“I never ask if the market is going to go up or down because I don’t know, and besides, it doesn’t matter. I search nation after nation for stocks, asking: ‘Where is the one that is lowest-priced in relation to what I believe it is worth?’ Forty years of experience have taught me you can make money without ever knowing which way the market is going.”—Sir John Templeton
“Investing isn’t about beating others at their game. It’s about controlling yourself at your own game.” – Benjamin Graham
“Successful investing is about managing risk, not avoiding it.” – Benjamin Graham
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