Looking for a great Xmas present for a fellow entrepreneur who's also made it big? How about a first edition of Security Analysis: Principles and Techniques by Benjamin Graham and David L. Dodd? AbeBooks (the mecca of book collectors) recently sold one for $29,000. But, don't worry, you can still pick up a signed first edition for only $48,000.
Originally published in 1934 (using notes Graham made soon after the Stock Market Crash of 1929), Security Analysis was the first book to describe the now nearly universal advice that you should pick stocks on the basis of the health and viability of the company rather than your guess that the stock will rise in value.
While first editions cost big bucks (a reflection of how important the book remains), you can get your own copy from Amazon for about the price of an average business tome. Meanwhile, here are some of Graham's most memorable quotes:
- 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.
- Abnormally good or abnormally bad conditions do not last forever.
- All things excellent are as difficult as they are rare.
- An elementary requirement for the intelligent investor is an ability to resist the blandishments of salesmen offering new common-stock issues during bull markets.
- An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.
- 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 naiveté.
- In the short run, the market is a voting machine, but in the long run, it is a weighing machine.
- Invest only if you would be comfortable owning a stock even if you had no way of knowing its daily share price.
- Investing isn't about beating others at their game. It's about controlling yourself at your own game.
- People who invest make money for themselves; people who speculate make money for their brokers.
- The intelligent investor is a realist who sells to optimists and buys from pessimists.
- 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.
- The longer the bull market lasts, the more severely investors will be affected with amnesia; after five years or so, many people no longer believe that bear markets are possible.
- While a trend shown in the past is a fact, a "future trend" is only an assumption.
- While enthusiasm may be necessary for great accomplishments elsewhere, on Wall Street it almost invariably leads to disaster.
- 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.
- You will be much more in control if you realize how much you are not in control.