80 Top Quotes From The Intelligent Investor
The Intelligent Investor by Benjamin Graham is a timeless classic that serves as the definitive guide to value investing. Widely regarded as the bible of investing, this book provides invaluable insights into the principles and strategies behind successful, long-term investment. Graham, a legendary investor and mentor to Warren Buffett, outlines the concepts of "Mr. Market" and "margin of safety," teaching investors to view the stock market as a partner rather than a master. He emphasizes the importance of a disciplined and patient approach to investing, focusing on the intrinsic value of companies rather than short-term market fluctuations.
The book explores various investment vehicles, from stocks and bonds to mutual funds, offering readers practical advice on building a diversified and resilient portfolio. Throughout the book, Graham underscores the significance of conducting thorough research and analysis before making investment decisions. By encouraging readers to prioritize risk management and rational decision-making, "The Intelligent Investor" equips them with the tools to navigate the unpredictable nature of the stock market with confidence and prudence. Aspiring and seasoned investors alike will find this book an indispensable resource for understanding the principles of value investing and laying the groundwork for financial success. (The Intelligent Investor Summary).
The Intelligent Investor Quotes
"Those who do not remember the past are condemned to repeat it.”
"An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
"The intelligent investor is a realist who sells to optimists and buys from pessimists.” (Meaning)
"The stock investor is neither right or wrong because others agreed or disagreed with him; he is right because his facts and analysis are right.”
"People who invest make money for themselves; people who speculate make money for their brokers.”
"But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
"The punches you miss are the ones that wear you out. —Boxing trainer Angelo Dundee”
"You will be much more in control, if you realize how much you are not in control.”
"Invest only if you would be comfortable owning a stock even if you had no way of knowing its daily share price.3”
"Buy cheap and sell dear.”
"You must thoroughly analyze a company, and the soundness of its underlying businesses, before you buy its stock; you must deliberately protect yourself against serious losses; you must aspire to “adequate,” not extraordinary, performance.”
"Plant trees that other men will sit under.”
"On the other hand, investing is a unique kind of casino—one where you cannot lose in the end, so long as you play only by the rules that put the odds squarely in your favor.”
"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.”
"A cynic once told G. K. Chesterton, the British novelist and essayist, “Blessed is he who expecteth nothing, for he shall not be disappointed.” Chesterton’s rejoinder? “Blessed is he who expecteth nothing, for he shall enjoy everything.”
"The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator’s primary interest lies in anticipating and profiting from market fluctuations. The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell. It is far from certain that the typical investor should regularly hold off buying until low market levels appear, because this may involve a long wait, very likely the loss of income, and the possible missing of investment opportunities."
"If the reason people invest is to make money, then in seeking advice they are asking others to tell them how to make money. That idea has some element of naïveté.”
"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.”
"Obvious prospects for physical growth in a business do not translate into obvious profits for investors.”
"Here is an all-too-brief summary of Buffett’s approach: He looks for what he calls “franchise” companies with strong consumer brands, easily understandable businesses, robust financial health, and near-monopolies in their markets, like H & R Block, Gillette, and the Washington Post Co. Buffett likes to snap up a stock when a scandal, big loss, or other bad news passes over it like a storm cloud—as when he bought Coca-Cola soon after its disastrous rollout of “New Coke” and the market crash of 1987. He also wants to see managers who set and meet realistic goals; build their businesses from within rather than through acquisition; allocate capital wisely; and do not pay themselves hundred-million-dollar jackpots of stock options. Buffett insists on steady and sustainable growth in earnings, so the company will be worth more in the future than it is today.”
"All things excellent are as difficult as they are rare.”
"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."
"An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
"With every new wave of optimism or pessimism, we are ready to abandon history and time-tested principles, but we cling tenaciously and unquestioningly to our prejudices. ”
"While enthusiasm may be necessary for great accomplishments elsewhere, on Wall Street it almost invariably leads to disaster.”
"The investment world nevertheless has enough liars, cheaters, and thieves to keep Satan's check-in clerks frantically busy for decades to come.”
"Hold an index fund for 20 years or more, adding new money every month, and you are all but certain to outper-forms the vast majority of professional and individual investors alike. Late in his life, Graham praised index funds as the best choice for individual investors, as does Warren Buffett.6”
"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.”
"Outright speculation is neither illegal, immoral, nor (for most people) fattening to the pocketbook. More than that, some speculation is necessary and unavoidable, for in many common-stock situations there are substantial possibilities of both profit and loss, and the risks therein must be assumed by someone.* There is intelligent speculation as there is intelligent investing. But there are many ways in which speculation may be unintelligent. Of these the foremost are: (1) speculating when you think you are investing; (2) speculating seriously instead of as a pastime, when you lack proper knowledge and skill for it; and (3) risking more money in speculation than you can afford to lose.”
"Since the profits that companies can earn are finite, the price that investors should be willing to pay for stocks must also be finite.”
"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. In the end, what matters isn’t crossing the finish line before anybody else but just making sure that you do cross it.8”
"The true investor scarcely ever is forced to sell his shares, and at all other times he is free to 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 judgment.†”
"The art of successful investment lies first in the choice of those industries that are most likely to grow in the future and then in identifying the most promising companies in these industries.”
"An elementary requirement for the intelligent investor is an ability to resist the blandishments of salesmen offering new common-stock issues during bull markets.”
"Closed at $1.19 per share. 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.”
"Likewise, investors were delighted to earn 11% on bank certificates of deposit (CDs) in 1980 and are bitterly disappointed to be earning only around 2% in 2003—even though they were losing money after inflation back then but are keeping up with inflation now.”
"A recent article in the Financial Analysts Journal confirmed what other studies (and the sad experience of many investors) have shown: that the fastest-growing companies tend to overheat and flame out.”
"There is no room in this philosophy for a middle ground, or a series of gradations, between the passive and aggressive status. Many,”
"Intelligence has nothing to do with IQ or SAT scores. It simply means being patient, disciplined, and eager to learn;”
"Many skeptics, it is true, are inclined to dismiss the whole procedure chart reading as akin to astrology or necromancy; but the sheer weight of its importance in Wall Street requires that its pretensions be examined with some degree of care.”
"I feel grateful to the Milesian wench who, seeing the philosopher Thales continually spending his time in contemplation of the heavenly vault and always keeping his eyes raised upward, put something in his way to make him stumble, to warn him that it would be time to amuse his thoughts with things in the clouds when he had seen to those at his feet. Indeed she gave him or her good counsel, to look rather to himself than to the sky. —Michel de Montaigne”
"The true investor scarcely ever is forced to sell his shares, and at all other times he is free to 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 judgment.”
"The only thing you can be confident of while forecasting future stock returns is that you will probably turn out to be wrong. The only indisputable truth that the past teaches us is that the future will always surprise us—always! And the corollary to that law of financial history is that the markets will most brutally surprise the very people who are most certain that their views about the future are right. Staying humble about your forecasting powers, as Graham did, will keep you from risking too much on a view of the future that may well turn out to be wrong.”
"Asset elephantiasis. When a fund earns high returns, investors notice—often pouring in hundreds of millions of dollars in a matter of weeks. That leaves the fund manager with few choices—all of them bad. He can keep that money safe for a rainy day, but then the low returns on cash will crimp the fund’s results if stocks keep going up. He can put the new money into the stocks he already owns—which have probably gone up since he first bought them and will become dangerously overvalued if he pumps in millions of dollars more. Or he can buy new stocks he didn’t like well enough to own already—but he will have to research them from.”
"Never buy a stock without reading the footnotes to the financial statements in the annual report. Usually labeled “summary of significant accounting policies,” one key note describes how the company recognizes revenue, records inventories, treats installment or contract sales, expenses its marketing costs, and accounts for the other major aspects of its business.7 In the other footnotes, watch for disclosures about debt, stock options, loans to customers, reserves against losses, and other “risk factors” that can take a big chomp out of earnings.”
"The heart of Graham’s argument is that the intelligent investor must never forecast the future exclusively by extrapolating the past.”
"I always find it extraordinary that so many studies are made of price and volume behavior, the stuff of chartists. Can you imagine buying an entire business simply because the price of the business had been marked up substantially last week and the week before? Of course, the reason a lot of studies are made of these price and volume variables is that now, in the age of computers, there are almost endless data available about them. It isn’t necessarily because such studies have any utility; it’s simply that the data are there and academicians have worked hard to learn the mathematical skills needed to manipulate them. Once these skills are acquired, it seems sinful not to use them, even if the usage has no utility or negative utility. As a friend said, to a man with a hammer, everything looks like a nail.”
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.”
"Most of the time, the market is mostly accurate in pricing most stocks. Millions of buyers and sellers haggling over price do a remarkably good job of valuing companies—on average. But sometimes, the price is not right; occasionally, it is very wrong indeed. And at such times, you need to understand Graham’s image of Mr. Market, probably the most brilliant metaphor ever created for explaining how stocks can become mispriced.1 The manic-depressive 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.”
"The people who now claim that the next “sure thing” will be health care, or energy, or real estate, or gold, are no more likely to be right in the end than the hypesters of high tech turned out to be.”
"The average doctor may be more likely than the average widow to elect to become an enterprising investor, and he is perhaps more likely to succeed in the undertaking. He has one important handicap, however—the fact that he has less time available to give to his investment education and to the administration of his funds. In fact, medical men have been notoriously unsuccessful in their security dealings. The reason for this is that they usually have an ample confidence in their own intelligence and a strong desire to make a good return on their money, without the realization that to do so successfully requires both considerable attention to the matter and something of a professional approach to security values.”
"Security analysis cannot presume to lay down general rules as to the ""proper value"" of any given common stock... The prices of common stocks are not carefully thought out computations, but the resultants of a welter of human reactions.”
"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. 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. The future value of every investment is a function of its present price. The higher the price you pay, the lower your return will be.”
"The really dreadful losses” always occur after “the buyer forgot to ask ‘How much?”
"Two pieces of advice to the investor that cannot avoid being contradictory in their implications. The first is: 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. If our first warning were followed strictly the second would be unnecessary.”
"According to tradition the sound reason for increasing the percentage in common stocks would be the appearance of the “bargain price” levels created in a protracted bear market. Conversely, sound procedure would call for reducing the common-stock component below 50% when in the judgment of the investor the market level has become dangerously high.”
"While it seems easy to foresee which industry will grow the fastest, that foresight has no real value if most other investors are already expecting the same thing.”
"Adequate size. A sufficiently strong financial condition. Continued dividends for at least the past 20 years. No earnings deficit in the past ten years. Ten-year growth of at least one-third in per-share earnings. Price of stock no more than 1½ times net asset value. Price no more than 15 times average earnings of the past three years.”
"But in other cases, making allowance for conversion rights—and the existence of stock-purchase warrants—can reduce the apparent earnings by half, or more.”
"Through chances various, through all vicissitudes, we make our way….”
"If you want to put money in investment funds, buy a group of closed-end shares at a discount of, say, 10% to 15% from asset value, instead of paying a premium of about 9% above asset value for shares of an open-end company. Assuming that the future dividends and changes in asset values continue to be about the same for the two groups, you will thus obtain about one-fifth more for your money from the closed-end shares.”
"A reduction in common-stock holdings where needed to bring it down to a maximum of 50 per cent of the total portfolio. The capital-gains tax must be paid with as good grace as possible, and the proceeds invested in first-quality bonds or held as a savings deposit.”
"The true investor scarcely ever is forced to sell his shares, and at all other times he is free to 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 judgment.”
"Financial scholars have been studying mutual-fund performance for at least a half century, and they are virtually unanimous on several points: the average fund does not pick stocks well enough to overcome its costs of researching and trading them; the higher a fund’s expenses, the lower its returns; the more frequently a fund trades its stocks, the less it tends to earn; highly volatile funds, which bounce up and down more than average, are likely to stay volatile; funds with high past returns are unlikely to remain winners for long.2”
"The fault, dear investor, is not in our stars- and no in our stocks- but in ourselves...”
"Instead of listening to Hoffman and his lapdog analysts, traders should have heeded the honest warning in Commerce One’s annual report for 1999: “We have never been profitable. We expect to incur net losses for the foreseeable future and we may never be profitable.”
"Savings and time deposits, savings-and-loan-association accounts, life insurance, annuities, and real-estate mortgages or equity ownership.”
"The readers to buy their stocks as they bought their groceries, not as they bought their perfume”
"Groundbreaking new research in neuroscience shows that our brains are designed to perceive trends even where they might not exist. After an event occurs just two or three times in a row, regions of the human brain called the anterior cingulate and nucleus accumbens automatically anticipate that it will happen again. If it does repeat, a natural chemical called dopamine is released, flooding your brain with a soft euphoria. Thus, if a stock goes up a few times in a row, you reflexively expect it to keep going—and your brain chemistry changes as the stock rises, giving you a “natural high.” You effectively become addicted to your own predictions.”
"I have little confidence even in the ability of analysts, let alone untrained investors, to select common stocks that will give better than average results. Consequently, I feel that the standard portfolio should be to duplicate, more or less, the DJIA.”
"The stock market’s performance depends on three factors: real growth (the rise of companies’ earnings and dividends) inflationary growth (the general rise of prices throughout the economy) speculative growth—or decline (any increase or decrease in the investing public’s appetite for stocks)”
"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 of owning and holding securities, receiving interest and dividends and increases in value.”
"No borrowing to buy or hold securities. No increase in the proportion of funds held in common stocks. A reduction in common-stock holdings where needed to bring it down to a maximum of 50 per cent of the total portfolio. The capital-gains tax must be paid with as good grace as possible, and the proceeds invested in first-quality bonds or held as a savings deposit.”
"Your chances of selecting the top-performing funds of the future on the basis of their returns in the past are about as high as the odds that Bigfoot and the Abominable Snowman will both show up in pink ballet slippers at your next cocktail party. In other words, your chances are not zero—but they’re pretty close. (See sidebar, p. 255.) But there’s good news, too. First of all, understanding why it’s so hard to find a good fund will help you become a more intelligent investor. Second, while past performance is a poor predictor of future returns, there are other factors that you can use to increase your odds of finding a good fund. Finally, a fund can offer excellent value even if it doesn’t beat the market—by providing an economical way to diversify your holdings and by freeing up your time for all the other things you would rather be doing than picking your own stocks.”
"Everybody knows that most people who trade in the market lose money at it in the end. The people who persist in trying it are either (a) unintelligent, or (b) willing to lose money for the fun of the game, or (c) gifted with some uncommon and incommunicable talent. In any case they are not investors. p12”
"Dividend Record. One of the most persuasive tests of high quality is an uninterrupted record of dividend payments going back over many years. We think that a record of continuous dividend payments for the last 20 years or more is an important plus factor in the company’s quality rating. Indeed the defensive investor might be justified in limiting his purchases to those meeting this test.”
"The third is the device of “dollar-cost averaging,” which means simply that the practitioner invests in common stocks the same number of dollars each month or each quarter. In this way he buys more shares”
"After all, the whole point of investing is not to earn more money than average, but to earn enough money to meet your own needs.”
"Can be so dangerous; the more you know going in, the less likely you are to probe a stock for weaknesses. This pernicious form of overconfidence is called “home”
"It’s expensive to trade small lots of convertible bonds, and diversification is impractical unless you have well over $100,000 to invest in this sector alone. Fortunately, today’s intelligent investor has the convenient recourse of buying a low-cost convertible bond fund. Fidelity and Vanguard offer mutual funds with annual expenses comfortably under 1%, while several closed-end funds are also available at a reasonable cost (and, occasionally, at discounts to net asset value).4”
"Finally, once a fund becomes successful, its managers tend to become timid and imitative. As a fund grows, its fees become more lucrative—making its managers reluctant to rock the boat. The very risks that the managers took to generate their initial high returns could now drive investors away—and jeopardize all that fat fee income."
"This has fluctuated, of course, with the general rate of economic activity, but it has shown no general tendency to advance with wholesale prices or the cost of living.”
"Usually labeled “summary of significant accounting policies,” one key note describes how the company recognizes revenue, records inventories, treats installment or contract sales, expenses its marketing costs, and accounts for the other major aspects of its business.”
"The really dreadful losses” always occur after “the buyer forgot to ask ‘How much?’” Most painfully of all, by losing their self-control just when they needed it the most, these people proved Graham’s assertion that “the investor’s chief problem—and even his worst enemy—is likely to be himself.”
"Never mingle your speculative and investment operations in the same account, nor in any part of your thinking.”
"Here are some quick considerations for the intelligent investor: Is the “net pension benefit” more than 5% of the company’s net income? (If so, would you still be comfortable with the company’s other earnings if those pension gains went away in future years?) Is the assumed “long-term rate of return on plan assets” reasonable? (As of 2003, anything above 6.5% is implausible, while a rising rate is downright delusional.)”
"Read backwards. When you research a company’s financial reports, start reading on the last page and slowly work your way toward the front. Anything”
"Today's investors have forgotten Graham's message. They put most of their effort into buying a stock, a little into selling it - but none into owning it. "Certainly," Graham reminds us, "there is just as much reason to exercise care and judgment in being as in becoming a stockholder.”
― Quotes from the book The Intelligent Investor by Benjamin Graham
The Intelligent Investor Author
Benjamin Graham, often referred to as the "father of value investing," was a highly influential economist, investor, and author. His groundbreaking book, "The Intelligent Investor," remains a timeless classic and a fundamental guide for value-oriented investors. Graham's investment philosophy emphasized the importance of fundamental analysis and a margin of safety, advocating for a disciplined, patient approach to investing in stocks and bonds. He believed that stock market fluctuations provided opportunities for value investors to buy undervalued securities and achieve superior long-term returns. Graham's teachings, notably through his concept of "Mr. Market" and the distinction between investing and speculation, have shaped the practices of numerous successful investors, including his most famous disciple, Warren Buffett. By imparting a rational and methodical framework for investing, Benjamin Graham's enduring legacy continues to influence investors worldwide, guiding them toward sound financial decision-making and a deeper understanding of the stock market.
Chief Editor
Tal Gur is an author, founder, and impact-driven entrepreneur at heart. After trading his daily grind for a life of his own daring design, he spent a decade pursuing 100 major life goals around the globe. His journey and most recent book, The Art of Fully Living, has led him to found Elevate Society.
