Piedmont Street Management: Registered Investment Adviser
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San Francisco, CA 94117
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Topics to Consider

The Intelligent Investor

by Prof. Benjamin Graham, Revised Edition, 1973.

Graham's famous text book is an excellent resource for those wishing to improve their skills and expertise. Here are some quotes or paraphrases:

Page 28. The defensive investor must confine himself to the shares of important companies with a long record of profitable operations and in strong financial condition.

Page 29. The defensive investor may also use other complementary practices. The first is the purchase of the shares of well-established investment funds (i.e., mutual funds) as an alternative to creating his own common-stock portfolio. The second 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.

Page 35. Graham's definition of investing could not be clearer: "An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return." Investing consists equally of three elements:

  • 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.

Page 36. People who invest make money for themselves; people who speculate make money for their brokers.

Page 104. Do not buy more stocks because the market has gone up; do not sell them because it has gone down.

Page 206. An investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored. Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.


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