Security Analysis

“I think that accounting is a very serious issue in a lot of companies. The need to make profits every quarter and to meet analysts’ estimates can be a debilitating force.”

“My own opinion is that the selection of individual securities is a matter partly of a special kind of judgment and insight, and partly of a good deal of security analysis training.”

“Perhaps nothing is more indicative of the quality of a company’s management than its accounting methods.”

“Our accounting is set to maximize cash flow, not reported earnings. Smoothing reported earnings just has to take a backseat.”

“The income statement lies more than the balance sheet.”

“If it’s a choice between investing in a good company in a great industry, or a great company in a lousy industry, I’ll take the great company in the lousy industry any day. Good management, a strong balance sheet, and a sensible plan of action will overcome many obstacles, but when you’ve got weak management, a weak balance sheet, and a misguided plan of action, the greatest industry in the world won’t bail you out.”

“If the balance sheet figures look right, I come to the next and hardest part — appraising management.”

“If a company has a sound balance sheet with minimal long-term debt, good growth prospects and responsible management, then the stock should be interesting.”

“Finance has its anatomy and its physiology. The former is studied through the medium of balance sheets, the latter through income statements.”

“My attitude towards business school is that there are six courses which are critical and most of those are accounting.”

“Money flows, in effect, can render fundamental analysis futile in the short run, even while creating a compelling longer-term opportunity.”

“The payoff to fundamental analysis rises proportionately with the difficulty of performing it.”