Never buy a stock because it has gone up or sell one because it has gone down. (pg. 206)
The investor should be aware that even though safety of its principal and interest may be unquestioned, a long term bond could vary widely in market price in response to changes in interest rates. (pg. 207)
Nothing important on Wall Street can be counted on to occur exactly in the same way as it happened before. (pg. 208)
Mr. Market does not always price stocks the way an appraiser or a private buyer would value a business. Instead, when stocks are going up, he happily pays more than their objective value; and, when they are going down, he is desperate to dump them for less than their true worth. (pg. 213)
The intelligent investor shouldn’t ignore Mr. Market entirely. Instead, you should do business with him- but only to the extent that it serves your interests. (pg. 215)
Mr. Market’s job is to provide you with prices; your job is to decide whether it is to your advantage to act on them. You no not have to trade with hime just because he constantly begs you to. (pg. 215)
Investing isn’t about beating others at their game. It’s about controlling yourself at your own game. (pg. 219)
The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go. (pg. 220)
Only in the exceptional case, where the integrity and competence of the advisers have been thoroughly demonstrated, should the investor act upon the advice of others without understanding and approving the decision made. (pg. 271)
Before you place your financial future in the hands of an adviser, it’s imperative that you find someone who not only makes you comfortable but whose honesty is beyond reproach. (pg. 274)
If fees consume more than 1% of your assets annually, you should probably shop for another adviser. (pg. 277)
The ideal form of common stock analysis leads to a valuation of the issue which can be compared with the current price to determine whether or not the security is an attractive purchase. (pg. 288)
The only thing you should do with pro forma earnings is ignore them. (pg. 323)
High valuations entail high risks. (pg. 335)
Related: Wash Sale Rules for Investing
Even defensive portfolios should be changed from time to time, especially if the securities purchased have an apparently excessive advance and can be replaced by issues much more reasonable priced. (pg. 360)
A defensive investor can always prosper by looking patiently and calmly through the wreckage of a bear market. (pg. 371)
The best values today are often found in the stocks that were once hot and have since gone cold. (pg. 371)
It’s nonsensical to derive a price/earnings ratio by dividing the known current price by unknown future earnings. (pg. 374)
Calculate a stock’s price/earnings ratio yourself, using Graham’s formula of current price divided by average earnings over the past three years. (pg. 374)
Avoid second-quality issues in making up a portfolio unless they are demonstrable bargains. (pg. 389)
To see how much a company is truly earning on the capital it deploys in its businesses, look beyond EPS to Return on Invested Capital (ROIC). (pg. 398)
Wall Street has a few prudent principles; the trouble is that they are always forgotten when they are most needed. (pg. 409)
Although there are good and bad companies, there is no such thing as a good stock; there are only good stock prices, which come and go. (pg. 473)
In the short run the market is a voting machine, but in the long run it is a weighing machine. (pg. 477)
The intelligent investor should recognize that market panics can create great prices for good companies and good prices for great companies. (pg. 483)
The secret of sound investment into three words: MARGIN OF SAFETY. (pg. 512)
The margin of safety is always dependent on the price paid. It will be large at one price, small at some higher price, nonexistent at some still higher price. (pg. 517)
There is a close logical connection between the concept of a safety margin and the principle of diversification. (pg. 518)
Diversification is an established tenet of conservative investment. (pg. 518)
It is our argument that a sufficiently low price can turn a security of mediocre quality into a sound investment opportunity — provided that the buyer is informed and experienced and he practices adequate diversification. For, if the price is low enough to create a substantial margin of safety, the security thereby meets our criterion of investment. (pg. 521)
Investment is most intelligent when it is most businesslike. (pg. 523)
Losing some money is an inevitable part of investing, and there’s nothing you can do to prevent it. But to be an intelligent investor, you must take responsibility for ensuring that you never lose most or all of your money. (pg. 526)
By refusing to pay too much for an investment, you minimize the chances that your wealth will ever disappear or suddenly be destroyed. (pg. 527)
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. (pg. 529)
Successful investing is about managing risk, not avoiding it. (pg. 535)
At heart, “uncertainty” and “investing” are synonyms. (pg. 535)
Without a saving faith in the future, no one would ever invest at all. To be an investor, you must be a believer in a better tomorrow. (pg. 535)
This article has been republished with permission from Arbor Investment planner.