The Most Important Paragraph About Investing Ever Written
Benjamin Graham wrote these lines in his celebrated book The Intelligent Investor,
The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons’ mistakes of judgement.
Jason Zweig of The Wall Street Journal has written updated editions of The Intelligent Investor and had this to say in the 2003 version of the book,
This may well be the single, most important paragraph in Graham’s entire book. In these 113 words, Graham sums up his lifetime of experience. You cannot read these words too often; they are like kryptonite for bear markets. If you keep them close at hand, and let them guide you throughout your investing life, you will survive whatever the markets throws at you
A new edition of the book released last month commemorating the original book's 75th anniversary. It is interesting to see Zweig change his view after 20 years. He writes,
In the previous edition, I wrote that those words in Chapter 8 "may well be the single most paragraph in Graham's entire book."I was wrong: Those words may well be the single most important paragraph about investing ever written.
You too can pin this quote [pdf] on your desk and start disregarding everyday market prices!
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It is clear that 24x7 price quotations are a liability for public market investors. We discuss this in great detail in this post,
The Paradox of Liquidity
What stock market investors can learn from private equity investors
Krishna Jha
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