Money and Finance
- More Thoughts From Phil Fisher On Selling A Great (and Growing) Business...
From Common Stocks and Uncommon Profits:There is still one other argument investors sometimes use to separate themselves from the profits they would otherwise make. This one is the most ridiculous of all. It is that the stock they own has had a huge...
- Phil Fisher On Financing Growth
From Common Stocks and Uncommon Profits: Therefore, if investment is limited to outstanding situations, what really matters is whether the company's cash plus further borrowing ability is sufficient to take care of the capital needed to exploit the...
- Graham And Dodd Quote
From Security Analysis: Current Earnings Should Not Be the Primary Basis of Appraisal. The market level of common stocks is governed more by their current earnings than by their long-term average. This fact accounts in good part for the wide fluctuations...
- Hussman Weekly Market Comment: A Warning From Graham And Dodd
Link to: A Warning from Graham and Dodd “During the latter stage of the bull market culminating in 1929, the public acquired a completely different attitude towards the investment merits of common stocks… Why did the investing public turn...
- Growth At Dirt Cheap Prices (gadcp)
From Modern Security Analysis:In GADCP, there is no emphasis on estimating future flows. Rather it is recognized that growth in common stock prices can come, and frequently does come, from sources other than corporate operations. Growth can come...
Money and Finance
Graham and Dodd on private owner valuation
From Security Analysis:
The other application of the principle of investing in undervalued common stocks is directed at individual issues, which upon analysis appear to be worth substantially more than they are selling for. It is rare that a common stock will appear satisfactory from every qualitative angle and at the same time will be found to be selling at a low price by such quantitative standards as earnings, dividends, and assets. Issues of this type would undoubtedly be eligible for a group purchase that would fulfill our supplementary criterion of “investment” given in Chap. 4. (“An investment operation is one that can be justified on both qualitative and quantitative grounds.”)
Of more practical importance is the question whether or not investment can be successfully carried on in common stocks that appear cheap from the quantitative angle and that—upon study—seem to have average prospects for the future. Securities of this type can be found in reasonable abundance, as a result of the stock market’s obsession with companies considered to have unusually good prospects of growth. Because of this emphasis on the growth factor, quite a number of enterprises that are long established, well financed, important in their industries and presumably destined to stay in business and make profits indefinitely in the future, but that have no speculative or growth appeal, tend to be discriminated against by the stock market—especially in years of subnormal profits—and to sell for considerably less than the business would be worth to a private owner.
We incline strongly to the belief that this last criterion—a price far less than value to a private owner—will constitute a sound touchstone for the discovery of true investment opportunities in common stocks. This view runs counter to the convictions and practice of most people seeking to invest in equities, including practically all the investment trusts. Their emphasis is mainly on long-term growth, prospects for the next year, or the indicated trend of the stock market itself. Undoubtedly any of these three viewpoints may be followed successfully by those especially well equipped by experience and native ability to exploit them. But we are not so sure that any of these approaches can be developed into a system or technique that can be confidently followed by everyone of sound intelligence who has studied it with care. Hence we must raise our solitary voice against the use of the term investment to characterize these methods of operating in common stocks, however profitable they may be to the truly skillful. Trading in the market, forecasting next year’s results for various businesses, selecting the best media for long-term expansion—all these have a useful place in Wall Street. But we think that the interests of investors and of Wall Street as an institution would be better served if operations based primarily on these factors were called by some other name than investment.
- More Thoughts From Phil Fisher On Selling A Great (and Growing) Business...
From Common Stocks and Uncommon Profits:There is still one other argument investors sometimes use to separate themselves from the profits they would otherwise make. This one is the most ridiculous of all. It is that the stock they own has had a huge...
- Phil Fisher On Financing Growth
From Common Stocks and Uncommon Profits: Therefore, if investment is limited to outstanding situations, what really matters is whether the company's cash plus further borrowing ability is sufficient to take care of the capital needed to exploit the...
- Graham And Dodd Quote
From Security Analysis: Current Earnings Should Not Be the Primary Basis of Appraisal. The market level of common stocks is governed more by their current earnings than by their long-term average. This fact accounts in good part for the wide fluctuations...
- Hussman Weekly Market Comment: A Warning From Graham And Dodd
Link to: A Warning from Graham and Dodd “During the latter stage of the bull market culminating in 1929, the public acquired a completely different attitude towards the investment merits of common stocks… Why did the investing public turn...
- Growth At Dirt Cheap Prices (gadcp)
From Modern Security Analysis:In GADCP, there is no emphasis on estimating future flows. Rather it is recognized that growth in common stock prices can come, and frequently does come, from sources other than corporate operations. Growth can come...