#1
Rebalancing
"The investor should periodically rebalance his portfolio to maintain the desired asset allocation."
Periodically rebalance your portfolio to restore target allocations and systematically sell high and buy low.
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Benjamin Graham🛡 Risk Management
Benjamin Graham's Risk Management Rules
Benjamin Graham (May 9, 1894 – September 21, 1976) was a British-born American economist, professor, and investor, widely known as the "father of value investing." His work laid the foundation for modern security analysis and investment philosophy. Graham taught at Columbia Business School for nearly three decades, where his students included Warren Buffett, who later called him the second most...
7 principles·Risk Management
7 Key Risk Management Principles
#2
Risk and Return
"The essence of investment management is the management of risks, not the management of returns."
Successful investing is fundamentally about controlling risk exposure, not maximizing return potential.
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Avoid Losses
"The first rule of investment is don't lose. And the second rule is don't forget the first rule."
Capital preservation must be your absolute first priority because losses require disproportionate gains to recover.
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Bond-Stock Ratio
"The investor should never have less than 25% or more than 75% of his funds in common stocks."
Maintain a flexible stock-bond allocation between 25-75% to adapt to changing market valuations.
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Diversification
"Diversification is an established tenet of conservative investment."
Spread investments across multiple securities to reduce the impact of any single wrong decision.
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Asset Protection
"The true investor will do better if he forgets about the stock market."
Focus on the underlying business performance rather than daily stock price movements to protect your assets.
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Defensive vs Enterprising
"The defensive investor will place his chief emphasis on the avoidance of serious mistakes or losses."
Defensive investors prioritize avoiding catastrophic losses over pursuing exceptional gains.
Read Full Analysis →Frequently Asked Questions
What are Benjamin Graham's key risk management principles?
Benjamin Graham has 7 key principles on risk management. The most important one is "Rebalancing" — The investor should periodically rebalance his portfolio to maintain the desired asset allocation.
How does Benjamin Graham apply risk management in practice?
Benjamin Graham applies risk management through several key principles including "Rebalancing" and "Risk and Return". These principles guide practical investment decisions and have been tested across decades of market cycles.
What makes Benjamin Graham's approach to risk management unique?
Benjamin Graham's approach to risk management is distinguished by a focus on long-term thinking and fundamental analysis. With 7 specific principles in this area, Benjamin Graham provides a comprehensive framework that investors at any level can study and apply to improve their decision-making.
