The Intelligent Investor, Rev. Ed (Collins Business Essentials)

Thus, in sum, we say that to have a true investment there must be present a true margin of safety. And a true margin of safety is one that

Graham feels that five elements are decisive.1 He summarizes them as:

If the investor is to rely chiefly on the advice of others in handling his funds, then either he must limit himself and his advisers strictly to standard, conservative, and even unimaginative forms of investment, or he must have an unusually intimate and favorable knowledge of the person who is going to direct his funds into other channels.

But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.

The activities specially characteristic of the enterprising investor in the common-stock field may be classified under four heads: Buying in low markets and selling in high markets Buying carefully chosen “growth stocks” Buying bargain issues of various types Buying into “special situations”

For a tiny minority of investors, a 100%-stock portfolio may make sense. You are one of them if you:

past average price/earnings multiplier.

Among the problems to watch for:

not as a victor but as a victim.