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9 Top Benjamin Graham Quotes on Value Investing

Benjamin Graham is one of the most successful value investors of all time and he also has given us some freaking amazing quotes throughout his life!  I have written quite a few posts on Benjamin Graham and maybe you can even call me a bit of a fanboy, so why not keep the train going with some of my favorite Benjamin Graham Quotes!

“You must never delude yourself into thinking that you’re investing when you’re speculating.”

This is one of the most important rules of value-investing!  You need to create your own checklist of what is important in a stock and stick to that checklist. 

benjamin graham checklist

Make sure that all of your investments are backed with great quantitative and qualitative analysis, but never based on speculation alone!

“Buy not on optimism, but on arithmetic.”

This is very similar in meaning to the quote above, but make sure that your analysis is financially based and not just based off of opinions, news articles and speculation – stick to the numbers!

“Individuals who cannot master their emotions are ill-suited to profit from the investment process.”

This is so important as an investor.  You need to know your risk tolerance before you even start to invest.  If you are the type that is going to sell when things get tough then you might need to avoid investing altogether, or potentially find a way to invest and never look at your account. 

If you’re the type that will sell when your investments are cut in half, like the S&P 500 did in 2008, then you’re going to be an awful investor.  You need to be able to stomach that pain and hold on because you will reap the rewards, just as those that didn’t sell in 2008 did and they’re now sitting at more than double the S&P 500 price BEFORE the market cut in half.

“Buy when most people, including experts, are pessimistic, and sell when they are actively optimistic.” and “The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The intelligent investor is a realist who sells to optimists and buys from pessimists.”

I am combining these two together because they are very similar in summary – buy from those that are pessimistic about the market or a particular company and sell to those that are optimistic. 

In theory, a pessimist is likely going to be willing to sell at a lower price than the current value because they’re down on the future outlook, and the exact opposite is true about selling to optimists that might be willing to pay above the current value of the company. 

In essence, your job is to stick to what is actually in front of you and evaluate each company for what it is.  Try to think opposite of most investors so you can find that diamond in the rough. 

“If you are shopping for common stocks, choose them the way you would buy groceries, not the way you would buy perfume. ”

Truthfully, I hadn’t heard this quote prior to reading a lot of these Benjamin Graham quotes from Awake the Greatness Within but I think this just makes so much sense and really hit home with me.  I had quite a few takeaways from this:

  • Brand doesn’t matter – don’t get caught up in buying the brand name of a stock
  • Quality is the most important – if you think that off brand pop tastes the same as Coke, then you’re indifferent about the product, right?  If you don’t think that they taste the same, then focus on the quality!
  • If quality is identical, focus on price – if you think the off-brand pop tastes like Coke, buy the cheaper option! 
  • Buy for the future – Don’t be that person that goes to the grocery store everyday to get through the week.  Take some time, make a list (do stock analysis), plan out what you need (identify your money goals) and then buy groceries (invest properly) to make sure that you don’t have check your inventory every single day.

“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 behavioural discipline that are likely to get you where you want to go.”

Along the same lines of above, your goals should be how you benchmark yourself rather than outperforming an index.  Is it good to track how you do against an index?  Yes, of course.  But if you’re consistently beating the index by 2% every year it doesn’t matter if you’re still going to miss your goals! 

You need to focus on your own, personal, goals.  Nobody (or very few people) start investing as a game to “beat the market” – you start investing to set yourself up for financial freedom at a later date, and that’s what you need to stay focused on.

“The true investor will do better if he forgets about the stock market and pays attention to his dividend returns and to the operation results of his companies.”

This is one that I admittedly still have issues with at times because it’s so easy to open Yahoo Finance and see how my stocks are doing whenever I am “bored” throughout the day.  It is so easy to focus on what the stock price is doing and make buy/sell decisions based off of that but you cannot let that dictate your portfolio! 

You need to focus on the financials of the company and avoid buying the rumor, selling the news.

“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.”

I think this is a fantastic one to end on and if you have ever listened to the Investing for Beginners Podcast then you know exactly why.  Andrew and Dave always talk about “investing with a margin of safety; emphasis on the safety” and guess what – they’re not the only ones!!