“I don’t believe any of us have the pretension of believing that by being very good analysts, or by going through very elaborate computations, we can be pretty sure of the correctness of our results. The only thing that we can be pretty sure of, perhaps, is that we are acting reasonably and intelligently. And if we are wrong, as we are likely to be, at least we have been intelligently wrong and not unintelligently wrong.”

“If you can throw your mind, as I can, as far back as 1914, you would be struck by some extraordinary differences in Wall Street then and today. In a great number of things, the improvement has been tremendous. The ethics of Wall Street are very much better. (Uhhh.) The sources of information are much greater, and the information itself is much more dependable. There have been many advances in the art of security analysis. In all those respects we are very far ahead of the past.

In one important respect we have made practically no progress at all, and that is in human nature. Regardless of all the apparatus and all the improvements in techniques, people still want to make money very fast. They still want to be on the right side of the market. And what is most important and most dangerous, we all want to get more out of Wall Street than we deserve for the work we put in.

There is one final area in which I think there has been a very definite retrogression in Wall Street thinking. That is in the distinctions between investment and speculation, which I spoke about at the beginning of this lecture. I am sure that back in 1914 the typical person had a much clearer idea of what he meant by investing his money, and what he meant by speculating with his money. He had no exaggerated ideas of what an investment operation should bring him, and nearly all the people who speculated knew approximately what kind of risks they were taking.”

“And he continues to have grave misgivings about consanguine practices still in use, albeit less extensively, since the toppling of the two-tier market: The reliance on projected future earnings to buy relatively high multiples, measurements of short-term and comparative performance, employment of standard rates of turnover to give the appearance of trying for better results, and weight of risk through beta or price fluctuation analysis.”

“I could not comprehend how the management of money by institutions has degenerated from the standpoint of sound investment to this rat race of trying to get the highest possible return in the shortest period of time. Those men gave me the impression of being prisoners of their own operations rather than controlling them. I say ‘prisoners’ in the sense that they have held themselves out as being able to do what their employers or contractors want them to do – which is to obtain a better-than-average return on the enormous amounts of money they handle. By definition, that’s practically impossible to do. They are promising performance both on the upside and on the downside that is not practical to achieve.”

“I take some malicious pleasure in saying it’s the book on finance (Security Analysis) that’s been read by more people and disregarded by more people than any other that I know of.”