How did Graham do it? Combining his extraordinary intellectual
powers with profound common sense and vast experience, Graham
developed his core principles, which are at least as valid today as they
were during his lifetime:
• 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.
• No matter how careful you are, the one risk no investor can ever
eliminate is the risk of being wrong. Only by insisting on what
Graham called the “margin of safety”—never overpaying, no matter
how exciting an investment seems to be—can you minimize
your odds of error.
• The secret to your financial success is inside yourself. If you
become a critical thinker who takes no Wall Street “fact” on faith,
and you invest with patient confidence, you can take steady
advantage of even the worst bear markets. By developing your
discipline and courage, you can refuse to let other people’s mood
swings govern your financial destiny. In the end, how your investments
behave is much less important than how you behave.
No comments:
Post a Comment