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Intelligent Investing Principles

The intelligent investor views stocks as ownership in businesses, emphasizing the importance of understanding underlying value rather than share price. Successful investing involves buying from pessimists and selling to optimists, while maintaining a margin of safety to minimize risks. Ultimately, personal discipline and critical thinking are key to navigating market fluctuations and achieving financial success.

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12 views1 page

Intelligent Investing Principles

The intelligent investor views stocks as ownership in businesses, emphasizing the importance of understanding underlying value rather than share price. Successful investing involves buying from pessimists and selling to optimists, while maintaining a margin of safety to minimize risks. Ultimately, personal discipline and critical thinking are key to navigating market fluctuations and achieving financial success.

Uploaded by

praveen
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

The intelligent investor is a realist who sells to optimists and buys from pessimists.

Principles
o 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
o 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.
o 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.
o 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.
o 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.

It has long been the prevalent view that 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
=============================
Obvious prospects for physical growth in a business do not translate into obvious
profits for investors.
Airline industry
The experts do not have dependable ways of selecting and concentrating on the
most promising companies in the most promising industries.

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