Investment decisions should be based on facts from "summary" of Security Analysis: Fifth Edition by Benjamin Graham,Sidney Cottle,David Le Fevre Dodd,Roger F. Murray,Frank E. Block,Martin L. Leibowitz
The fundamental principle underlying any investment decision is the necessity for it to be based upon a foundation of facts. This principle is critical to the process of security analysis, as it forms the basis for determining the intrinsic value of a security. Without a careful examination and evaluation of the relevant facts, any investment decision is likely to be based on speculation rather than sound analysis. Facts are the building blocks of investment decisions, providing the necessary information for investors to assess the potential risks and rewards associated with a particular security. By relying on facts rather than speculation or emotion, investors can make more informed and rational decisions that are grounded in reality rather than in wishful thinking. The importance of basing investment decisions on facts cannot be overstated, as doing so helps to mitigate the inherent uncertainties and risks associated with investing in securities. By carefully analyzing the facts and data relevant to a given security, investors can better understand its true value and make more accurate predictions about its future performance. Furthermore, a reliance on facts helps to ensure that investment decisions are based on objective criteria rather than subjective opinions or biases. By focusing on the facts, investors can avoid falling prey to common cognitive biases that can lead to suboptimal decision-making.- The principle that investment decisions should be based on facts is a foundational concept in security analysis. By adhering to this principle, investors can make more informed, rational, and objective decisions that are grounded in reality rather than speculation. Ultimately, the reliance on facts helps to minimize risk and uncertainty, leading to better investment outcomes in the long run.
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