If you’ve read any of our Cabot Wealth Network blog posts, newsletters, or social media, you’ve almost certainly come across a few Benjamin Graham quotes. He’s a bit of a hero around here. If investing were a sport, he’d be right there beside Wilt Chamberlain or Vince Lombardi. (Or for our younger readers, Alex Morgan or Patrick Mahomes.)
And just like some of those skills and techniques that these great players have passed down to new generations, Benjamin Graham has also made an undeniable impact on the world of investing. Even if you don’t know who he is, there’s a darn good chance you follow some of his investing advice.
Who is Benjamin Graham?
Benjamin Graham is widely acknowledged as the father of modern security analysis and the father of value investing. His timeless books, Security Analysis and The Intelligent Investor, are considered the bibles for both individual investors and Wall Street professionals.
Graham’s clear teachings of analyzing stocks and bonds using formulas and restrictive conditions make sense and are easy to follow. He taught investment courses at Columbia University in addition to running his Graham-Newman Partnership for many years. Many of his students at Columbia became successful investors, including Warren Buffett.
10 Benjamin Graham quotes that changed the history of investing
Some of these Benjamin Graham quotes are actually concepts or phrases that he coined and not actual quotes. Still, they are fundamental concepts for value investors, or really, anyone who plans to make money in the stock market.
“Margin of Safety” is the famous term coined by Ben Graham in Security Analysis. In simple terms, an asset worth $100 and bought at $80 has a better Margin of Safety than the same asset purchased at $95.
Graham is also known for the concept of Mr. Market. Here is his explanation:
“Imagine that in some private business you own a small share that cost you $1,000. One of your partners, named Mr. Market, is very obliging indeed. Every day he tells you what he thinks your interest is worth and furthermore offers either to buy you out or to sell you an additional interest on that basis. Sometimes his idea of value appears plausible and justified by business developments and prospects as you know them. Often, on the other hand, Mr. Market lets his enthusiasm or his fears run away with him, and the value he proposes seems to you a little short of silly.”
The point of this idea is that you can decide whether or not to buy or sell shares based on what’s happening in the market.
Now, on to the 10 Benjamin Graham quotes, all of which are valuable in today’s market, and some of which are quite amusing.
- “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.”
Along with these Benjamin Graham quotes, here are a few from some of our other favorite investors, including Graham’s student Warren Buffett, that also apply to smart investing.
“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” —Warren Buffett
“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.” —Warren Buffett
“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
“Invest at the point of maximum pessimism.”—Sir John Templeton
We’ll leave you with one last Benjamin Graham quote that sums up much of the advice already on this page:
“Even the intelligent investor is likely to need considerable willpower to keep from following the crowd.”—Benjamin Graham
Do you have a favorite quote or two that conceptualize your investing philosophy? We’d love to read them in the comments.
*This post has been previously published and is periodically updated.