Benjamin Graham

"You are neither right nor wrong because people agree with you."

"The idea of storage as a solution of economic problems at least has the support of common sense.It is diametrically opposed to the topsy-turvy Alice-in-Wonderland reasoning that has marked so much of our depression thinking and policy."

"Instead of passing blithely over into that Promised Land, flowing almost literally with milk and honey, it may be our destiny to wander a full 40 years or more in the wilderness of doubt and divided sentiments."

"Even the most conservative must realize that the recent transformation of surplus from an individual to a national disaster implies a scathing indictment of our capitalist system as it has now developed."

"Whether we like it or not, government intervention in the face of surplus is here to stay."

"It is a fact worth pondering that four centuries ago the evil of "an abundance or surplus" arose from its being kept off the market, while today the evil of surplus lies in its being thrown upon the market."

"The State can always afford to finance what its citizens can soundly produce."

"The Reservoir system will function not only as an equalizer of business conditions, but also as a national store to meet further emergencies, such as war and drought, and-most important of all-as the concrete means of developing a steadily higher living standard for all."

"Why should the cotton growers suffer if there is shortage of wheat?"

"Price statistics show clearly that instability in raw-material prices is a prime cause of instability of other prices."

"The existence of such a war chest might go far to strengthen our prestige and frighten off any would be assailant."

"Both a priori reasoning and experience teach us that as as these funds grow larger the geometrical rate of growth by compound interest ultimately defeats itself."

"The money cost of the reservoir plan literally fades into insignificance when it is compared with the financial burden which the great depression imposed on the nation."

"The utility, or intrinsic value of gold as a commodity is now considerably less than in the past; its monetary status has become extraordinarily ambiguous; and its future is highly uncertain."

"THERE is widespread agreement among economists that abuse of credit constitutes one of the chief unwholesome elements in business booms and is mainly responsible for the ensuing crash and depression."

"The volume of credit depends upon three factors: the desire to borrow, the ability to lend and the desire to lend."

"There is something paradoxical in the fact that by establishing an export market we subject our entire domestic production to the vagaries of that market."

"It must be fundamentally wrong to reduce production of food and fiber while one-third of our population is still ill fed and ill clothed."

"The Reservoir plan is an engineering mechanism applied to the field of economics, and in its essence it has nothing to do with democracy or any other political philosophy."

"The people of the United States will not tolerate another deep depression that arises not from any lack of natural resources, productive capacity or man and brain power, but solely from imperfections in the functioning of the system of finance capitalism."

"The world has not learned the technique of balanced expansion without the resultant commercial and financial congestion."

"Cartels have spread and will spread as long as the world lacks an effective mechanism by which balanced expansion may be achieved without a resulting disruption of prices."

"The modern world is not geared properly to the storage of goods."

"The story of Joseph in Egypt and of the seven fat and the seven lean years has passed into the homely wisdom of the ages; but our economic thinking seems to have lost contact with so simple and basic approach to prudent management of a nations welfare."

"Many progressive economists insist that gold is now in essentially the same position as silver and that the arguments the simon-pure gold advocates use against the white metal can be directed with equal effect against their own fetish."

"It is a misfortune of the times that all of us must needs be amateur economists-including, and perhaps especially, the professionals."

"We have introduced the monetary factor not by necessity but by choice. Its advantages are obvious. Self-financed commodity units are not only interest free, but free also from dependence upon credit conditions. They are a step-desirable, it seems to us-in the direction of a goods economy as distinct from a money economy; but this step is taken without violence by merely identifying basic goods with money. It guarantees unfailing purchasing power where it is most needed-among the countless producers of raw commodities."

"Though business conditions may change, corporations and securities may change, and financial institutions and regulations may change, human nature remains the same. Thus the important and difficult part of sound investment, which hinges upon the investor's own temperament and attitude, is not much affected by the passing years."

"The history of the past fifty years, and longer, indicates that a diversified holding of representative common stocks will prove more profitable over a stretch of years than a bond portfolio, with one important provisio—that the shares must be purchased at reasonable market levels, that is, levels that are reasonable in the light of fairly well-defined standards derived from past experience."

"Stocks can be dynamite."

"The genuine investor in common stocks does not need a great equipment of brain and knowledge, but he does need some unusual qualities of character"

"It is no difficult trick to bring a great deal of energy, study, and native ability into Wall Street and to end up with losses instead of profits. These virtues, if channeled in the wrong directions, become indistinguishable from handicaps."

"All the real money in investment will have to be made—as most of it has been in the past— not out of buying and selling but out of owning and holding securities, receiving interests and dividends therein, and benefiting from their long-term increases in value. Hence stockholder's major energies and wisdom as investors should be directed toward assuring themselves of the best operating results from their corporations. This in turn means assuring themselves of fully honest and competent managements."

"Nothing in finance is more fatuous and harmful, in our opinion, than the firmly established attitude of common stock investors regarding questions of corporate management. That attitude is summed up in the phrase: "If you don't like the management, sell your stock." [...] The public owners seem to have abdicated all claim to control over the paid superintendents of their property"

"Intelligent investment is more a matter of mental approach than it is of technique. A sound mental approach toward stock fluctuations is the touchstone of all successful investment under present-day conditions."

"In most cases the favorable price performance will be accompanied by a well-defined improvement in the average earnings, in the dividend, and in the balance-sheet position. Thus in the long run the market test and the ordinary business test of a successful equity commitment tend to be largely identical."

"A price decline is of no real importance to the bona fide investor unless it is either very substantial—say, more than a third from cost—or unless it reflects a known deterioration of consequence in the company's position. In a well-defined bear market many sound common stocks sell temporarily at extraordinary low prices. It is possible that the investor may then have a paper loss of fully 50 per cent on some of his holdings, without any convincing indication that the underlying values have been permanently affected."

"Why could the typical investor expect any better success in trying to buy at low levels and sell at high levels than in trying to forecast what the market is going to do? Because if he does the former he acts only after the market has moved down into buying levels or up into selling levels. His role is not that of a prophet but of a businessman seizing clearly evident investment opportunities. He is not trying to be smarter than his fellow investors but simply trying to be less irrational than the mass of speculators who insist on buying after the market advances and selling after it goes down. If the market persists in behaving foolishly, all he seems to need is ordinary common sense in order to exploit its foolishness."

"It is worth pointing out that assuredly not more than one person out of a hundred who stayed in the market after after 1925 emerged from it with a net profit and that the speculative losses taken were appalling."

"Whenever the investor sold out in an upswing as soon as the top level of the previous well-recognized bull market was reached, he had a chance in the next bear market to buy back at one third (or better) below his selling price."

"The graph does show one tremendous rise and collapse which stands out starkly from all the other fluctuations. This is commonly called the "new era" stock market of 1927-33. The striking feature of this phenomenon was that the new era existed solely in the minds of market speculators. The whole episode, in retrospect, now seems to have been one of those rare manifestations of mass financial madness which we used to study in our history books under the titles of "the South Sea Bubble", "the Mississippi Bubble" and so on."

"The purchase of a bargain issue presupposes that the market's current appraisal is wrong, or at least that the buyer's idea of value is more likely to be right than the market's. In this process the investor sets his judgement against that of the market. To some this may seem arrogant or foolhardy."

"If General Motors is worth $60 a share to an investor it must be because the full common-stock ownership of this gigantic enterprise as a whole is worth 43 million (shares) times $60, or no less than $2,600 million."

"The true investor scarcely ever has to sell his shares, and at all other times he is free di disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus 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 judgement."

"The investor has the benefit of the stock market's daily and changing appraisal of his holdings, for whatever that appraisal may be worth, and, second, that the investor is able to increase or decrease his investment at the market's daily figure—if he chooses. Thus the existence of a quoted market gives the investor certain options which he does not have if his security is unquoted. But it does not impose the current quotation on an investor who prefers to take his idea of value from some other source."

"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. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies."

"The investor's primary interest lies in acquiring and holding suitable securities at suitable prices."

"The investor would not be far wrong if this motto read more simply: "Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop"."

"Good managements produce a good average market price, and bad managements produce bad market prices."

"If we assume that there are normal or standard income results to be obtained from investing money in securities, then the role of the adviser can be more readily established. He will use his superior training and experience to protect his clients against mistakes and to make sure that they obtain the results to which their money is entitled."