Saturday 25 December 2010

Some passive advice from Benjamin Graham

Benjamin Graham, Mr. Buffett's mentor, is required reading for anyone who is serious about active investing. He died in 1976 and, during that year, he said the following:

“I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when our textbook Graham and Dodd was first published; but the situation has changed a great deal since then. In the old days, any well-trained security analyst could do a good professional job of selecting undervalued issues through detailed studies; but in the light of the enormous amount of research now being carried on, I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost.”

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