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Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.
--
Chapter 20, "Margin of Safety": The Central Concept, p. 280

 

Benjamin Graham

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What became a problem is there was a clause that allowed investors to cover losses. As long as you made losses one year, you could carry them over to the next and to the next. And because of that they would pay no taxes. So this fellow takes all the gold away and he says he makes losses and so he does not pay us anything. So he is the only one that is being protected. Those of us who are losing our resources are not protected. This is the thing that created the kind of debate that we had and we had to renegotiate.

 

Jakaya Kikwete

 

...Board of Directors have to make certain kinds of decisions, and those decisions are pretty narrowly constrained. They have to be committed to increasing profit share and market share. That means they're going to be forced to try to limit wages, to limit quality, to use advertising in a way that sells goods even if the product is lousy. Who tells them to do this? Nobody. But if they stopped doing it, they'd be out of business. Similarly, if an editorial writer for the New York Times were to start, say, telling the truth about the Panama invasion -- which is almost inconceivable, because to become an editorial writer you'd already have gone through a filtering process which would weed out the non-conformists -- well, the first thing that would happen is you'd start getting a lot of angry phone calls from investors, owners, and other sectors of power. That would probably suffice. If it didn't, you'd simply see the stock start falling. And if they continued with it systematically, the New York Times would be replaced by some other organ. After all, what is the New York Times? It's just a corporation. If investors and advertisers don't want to support it, and the government doesn't want to give it the special privileges and advantages that make it a "newspaper of record," it's out of business.

 

Noam Chomsky

 

But a pin lies in wait for every bubble. And when the two eventually meet, a new wave of investors learns some very old lessons: First, many in Wall Street ? a community in which quality control is not prized ? will sell investors anything they will buy. Second, speculation is most dangerous when it looks easiest.

 

Warren Buffett

 

We cannot rely on mass inspection to improve quality, though there are times when 100 percent inspection is necessary. As Harold S. Dodge said many years ago, 'You cannot inspect quality into a product.' The quality is there or it isn't by the time it's inspected.

 

W. Edwards Deming

 

With joint-stock corporations, investors can place bets on the success of many different companies, without having to play a central management role in any one of them. This allows investors to diversify their financial holdings. It also allows them to capture profits on their investments, without having to get involved in the dirty, troublesome business of actually running a company.

 

Jim Stanford