Ben Graham Defines an Investment

by Geoff Gannon

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