Common Stocks and Uncommon Profits and Other Writings

"It seems logical that before even thinking of buying any common stock the first step is to see how money has been most successfully made in the past."

"Go to five companies in an industry, ask each of them intelligent questions about the points of strength and weakness of the other four, and nine times out of ten a surprisingly detailed and accurate picture of all five emerge."

"Some of these points concern matters which should largely be determined from information obtained from sources outside the company being studied, while others are best solved by direct inquiry from the company personnel."

"The young growth stock offers by far the greatest possibility of gain. Sometimes this can mount up to several thousand per cent in a decade."

"These forces are seldom all pulling stock prices in the same direction at the same time."

"There are three reasons, and three reasons only, for the sale of any common stock."

"One of the main reasons for the confusion about dividends in the public mind is the great variation between the amount of benefit, if any, that accrues to the stockholder each time earnings are not passed on to him but retained in the business."

"Don't buy into promotional companies."

"Don't overstress diversification."

"No one could possibly have the time to investigate more than a tiny percent of the available field. How do you select the one or the very few stocks to the investigation of which you will devote such time as you have to spare?"

"To be a truly conservative investment a company—for a majority if not for all of its product lines—must be the lowest-cost producer or about as low as a cost producer as any competitor."

"The company with real investment merit is the company that usually promotes from within."

"The "above-average" profit margin or "greater than normal" return on investment need not be—in fact, should not be—many times that earned by industry in general to give a company's shares great investment appeal."

"Wide variations between the financial community's appraisal of a stock and the true set of conditions affecting it may last for several years."

"Sustained success requires skill and consistent application of sound principles."

"I want to make sure that the firm's management has the wherewithal to capitalize on the potential and to minimize my investment risks in the process."