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.
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