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View Full Version : Benjamin Graham's view on investing


Steve
02-20-2011, 08:49 PM
Benjamin Graham is a famous investor who wrote many books on the topic of investing. His two most famous are 'Security Analysis' and probably the most well known is 'The Intelligent Investor.'

His definition of an investment operation is "one which, upon thorough analysis, promises safety of principle and a satisfactory return. Operations not meeting these requirements are speculative."

Now this is a great starting point to understand investing. All too often, a person will hear of a hot stock tip and buy into it for no other reason than they heard a tip. There will be no forethought or research put into the purchase.

It is kind of crazy when you think about how much research one will do when buying something like a mower, trimmer, blower or whatever and yet when it comes to investing, they will just do it without thought.

In that definition, Benjamin talks about the difference between an investment operation and speculation. He saw investing as an operation that had multiple steps to it.

Speculation on the other hand was buying stocks or bonds for no other reason than to gamble your money with no safety of the principle or promise of return.

Now as you reflect on that, do you if you purchase stocks or bonds, that you are an investor or a speculator?