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“Those who do not remember the past are condemned to repeat it.”
“Obvious prospects for physical growth in a business do not translate into obvious profits for investors.”
The intelligent investor realizes that stocks become more risky, not less, as their prices rise—and less risky, not more, as their prices fall. 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. 8
“An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.
I suggest that you rebalance every six months, no more and no less, on easy-to-remember dates like New Year’s
Interesting . Select a date for portfolio rebalancing every 6 months to balance equity and debt.
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.
Always remember
But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.
Over a 10- or 20- or 30- year investment horizon, Mr. Market’s daily dipsy-doodles simply do not matter. In any case, for anyone who will be investing for years to come, falling stock prices are good news, not bad, since they enable you to buy more for less money.
The company is a “serial acquirer.” An average of more than two or three acquisitions a year is a sign of potential trouble.
A firm that pays its CEO $100 million in a year had better have a very good reason.
Companies that repeatedly split their shares—and hype those splits in breathless press releases—treat their investors like dolts. Like Yogi Berra, who wanted his pizza cut into four slices because “I don’t think I can eat eight,” the shareholders who love stock splits miss the point.
Don’t take a single year’s earnings seriously. The second is: If you do pay attention to short-term earnings, look out for booby traps in the per-share figures.
Graham recommends a “ratio of price to assets” (or price-to-book-value ratio) of no more than 1.5.
“the heart has its reasons that the reason doesn’t understand.”* For “heart” read “Wall Street.”
It is easy in the world to live after the world’s opinion; it is easy in solitude to live after our own; but the great man is he who in the midst of the crowd keeps with perfect sweetness the independence of solitude.
Mathematics is ordinarily considered as producing precise and dependable results; but in the stock market the more elaborate and abstruse the mathematics the more uncertain and speculative are the conclusions we draw therefrom. In forty-four years of Wall Street experience and study I have never seen dependable calculations made about common-stock values, or related investment policies, that went beyond simple arithmetic or the most elementary algebra.
