Benjamin Graham's Timeless Investing Advice

One quote that resonated early in my investing career comes from none other than the great Benjamin Graham, mentor to Warren Buffett in 1934. He said, "The stock market is a voting machine in the short term but a weighing machine in the long term." At first, I didn't quite grasp the meaning behind it. I read and re-read the quote, wondering how the stock market could be compared to a voting machine or a weighing machine. What did politics have to do with stocks?

As I’ve grown older (and hopefully a little wiser) in my investing journey, this quote has stayed with me and has often guided me in making sound investment decisions. It's a piece of advice I’d like to share with you, in the hope that it helps on your own path.

The key takeaway from Graham's quote is that, in the short term, the stock market is influenced by the opinions, emotions, and popularity of investors. This results in fluctuating prices and hype surrounding certain stocks. You see this all the time on TV or read about it in the news. You may have experienced it during the most recent market downturn. In the long term, however, the true value of a company is determined by its fundamentals: strong financials, a competitive advantage, and a solid business model. In other words, a company's true weight will eventually be reflected in its stock price.

My two cents: Please don't get sucked into the hype or craziness of the markets. Don't fall trap to the get rich schemes. The stock market will go up and it will go down. Stick to sound investing principles and do your homework by looking at a company's financials, competitive advantage, and investigate if the company has a strong core business model before making any investment decision. And most importantly remember Graham's quote: "the stock market is a voting machine in the short term but a weighing machine in the long term."