Tuesday, December 14, 2010

Ben Graham: Low Quality, Favorable Business Conditions

"...the risk of paying too high a price for good-quality stocks - while a real one - is not the chief hazard confronting the average buyer of securities. Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions. The purchasers view the current good earnings as equivalent to 'earning power' and assume that prosperity is synonymous with safety." - From Chapter 20 of Benjamin Graham's book, The Intelligent Investor
 
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