An investment operation is one which can be justified on both qualitative and quantitative grounds.

An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return.

Thorough Analysis: The study of the facts in the light of established standards of safety and value.

Safety: Protection against loss under all normal or reasonably likely conditions or variations.

Satisfactory Return: Any rate or amount of return, however low, which the investor is willing to accept, provided he acts with reasonable intelligence.

(Security Analysis, 1940)

 

To have a true investment there must be present a true margin of safety. And a true margin of safety is one that can be demonstrated by figures, by persuasive reasoning, and by reference to a body of actual experience.

(The Intelligent Investor, 1949)

 

Key Terms

• Operation
• Qualitative
• Quantitative
• Thorough Analysis
• Safety of Principal
• Satisfactory Return
• Margin of Safety
• Figures
• Persuasive Reasoning
• Body of Actual Experience