Buy at One-Third of Sellout Value Then Wait

"If you could take the stock price and multiply it by the number of shares and get something that was one third or less of sellout value, [Ben Graham] would say that you’ve got a lot of edge going for you. Even with an elderly alcoholic running a stodgy business, this significant excess of real value per share working for you means that all kinds of good things can happen to you. You had a huge margin of safety—as he put it—by having this big excess value going for you. —CHARLIE MUNGER, UNIVERSITY OF SOUTHERN CALIFORNIA (USC) BUSINESS SCHOOL, 1994"

"Graham value investing system simply: buy at a bargain defined by a margin of safety and wait."

"As long as the fundamentals of the business itself remain in place, a market’s short-term views on the price of the shares can be ignored and will be corrected in the long term. This approach reinforces the importance of a fundamental analysis of the business itself. There are essentially three steps in the process: analyze the business to determine intrinsic value, buy the assets at a significant bargain, and wait."

"Simply put, your objective as a Graham value investor is to buy a share of stock at a sufficiently large bargain that you do not need to predict short-term price movements in the stock market."