A short excerpt of investment wisdom from Benjamin Graham

Benjamin Graham was the investor who during his time taught that investments should be approached by sound principles of analysis. He taught that it is possible to valuate investments to estimate their value by fundamental approach. Here, I include an excerpt from one of my readings of his writings from the book, "The Rediscovered Benjamin Graham, Selected Writings of the Wall Street Legend by Janet Lowe."

"Let me close with a few words of counsel from an 80-year-old-veteran of many a bull and many a bear market. Do those things as an analyst that you know you can do well, and only those things. If you can really beat the market by charts, by astrology, or by some rare and valuable gift of your own, then that's the row you should hoe. If you're really good at picking stocks most likely to succeed in the next 12 months, base your work on that endeavor. If you can foretell the next important development in the economy, or in technology, or in consumers' preferences, and gauge its consequences for various equity values, then concentrate on that particular activity. But in each case you must prove to yourself by honest, no-bluffing self-examination and by continuous testing of performance, that you have what it takes to produce worthwhile results.

If you believe - as I have always believed - that the value approach is inherently sound, workable, and profitable, then devote yourself to that principle. Stick to it, and don't be led astray by Wall Street's fashions, illusions, and its constant chase after the fast dollar. Let me emphasise that it does not take a genius or even a superior talent to be successful as a value analyst. What it needs is, first, reasonably good intelligence; second, sound principles of operation; third, and most important, firmness of character.

But whatever path you follow as financial analysts, hold on to your moral and intellectual integrity. Wall Street in the past decade fell far short of its once-praiseworthy ethical standards, to the great detriment of the public it serves and of the financial community itself. When I was in elementary school in this city, more than 70 years ago, we had to write various maxims in our copybooks. The first on the list was "Honesty is the best policy." It is still the best policy....."

Graham has addressed a few issues by this sharing from a veteran investor. First, there may not be only one successful approach to investing. An investor can live out any investment philosophy he is comfortable with. However, whichever investing approach an investor chooses, he must not fall in love and be deluded with it's usefulness but instead test out rigourously whether the approach really yields success in getting consistent good returns on investments.

Second, investment success is not only exclusive to the selected experts in investment field (e.g. fund managers, financial analysts, or anyone with depth of training in the field of finance and investments). The qualities essential for investment success are reasonably good intelligence, sound principles of operation and firmness of character. Of course, an investor needs to learn first to acquire a set of sound operating principles and then have the tenacity to follow through the sound operating principles for investment success. As such, one has to be careful of any distractions that promises 'seemingly fast money' based on following certain 'dubious investing methods' unless that method has been already rigourously tested for it's consistent results.

Third and last, as financial analysts, one should handle his trade with moral and intellectual integrity. As such, this is also a warning for one to view any form of research reports related to investments with healthy skepticism and objectivity since one does not know the analyst(s) behind any research reports is(are) reporting based on upmost moral and intellectual integrity.