Buy your stocks like you buy your groceries, not the way you buy perfume – Ben Graham

I came across this quote, and i found it quite funny and yet insightful, thus decided to share it here …

First, few words about Ben Graham:
Benjamin Graham (1894 –1976) was a British-American economist, professor and investor. He is known as the “father of value investing”. Graham wrote two of the founding texts in neoclassical investing: Security Analysis (1934), and The Intelligent Investor (1949).

About the quote:

In the introduction of Benjamin Graham’s book, The Intelligent Investor, Mr. Graham states:
In an article in a women’s magazine many years ago we advised the readers to buy their stocks as they bought their groceries, not as they bought their perfume.  The really dreadful losses of the past few years (and on many similar occasions before) were realized in those common-stock issues where the buyer forgot to ask “How much?”

Buy your stocks like you buy your groceries, not the way you buy perfume.

Benjamin Graham

The context of the quote is that it was published in a women’s magazine and destined to the ladies that read that magazine. Hence the meaning was, that you should buy your stocks after asking about the price, and comparing it to the historical price and value of the produce. Not as a perfume, where the price is mostly determined by the marketing.

To translate this into modern era terms. Buy your stocks based on fundamentals, and what the company does, do not buy your stocks based on hype.