Ben Graham on Speculation

Ben Graham on Speculation

 

What is in the best interests of brokers--that is, maximizing commissions--is not in the best interests of investors.

Wall street historically has prospered from speculation, according to Ben Graham, but he believed that speculators themselves on the whole lose money. "Hence," he stated, "it has been logically impossible for brokerage houses to operate on a thoroughly professional basis."

If only we could actually listen to Graham, the father of Value Investing, and actually force ourselves to follow the above advice, we would all be:

• Richer
• Able to sleep peacefully at night

I must admit, however, that despite trying for at least a decade and beyond, I have not been able to overcome the temptation completely!

Regards,

N

---

Quotable quote from Benjamin Graham

Quotable quote from Benjamin Graham

"The chief losses to investors come from the purchase of low-quality securities at times of favourable business conditions."

Think of some famous examples:

Guys who bought Pentamedia, Silverline, NEPC group shares, etc. will be able to vouch for the veracity of such quotes.

At every level of the BSE Sensex, we'll be able to find such scrips - Just take a look at ET and identify a list of shares which are quoting at a PE of over 100 and you're likely to find a whole host of candidates eminently suited to be part of such a list of securities!

Regards,

N

---