Money and Finance
- Excerpt From Warren Buffett’s 1957 Partnership Letter
An excerpt from Warren Buffett’s 1957 letter that may be useful to think about in regards to current stock market levels:In last year's letter to partners, I said the following: My view of the general market level is that it is priced above...
- Graham And Dodd Quote
From Security Analysis, 1940 edition:To sum up this discussion of qualitative and quantitative factors, we may express the dictum that the analyst’s conclusions must always rest upon the figures and upon established tests and standards. These figures...
- Seth Klarman Quote
From Margin of Safety(Source):Many investors insist on affixing exact values to their investments, seeking precision in an imprecise world, but business value cannot be precisely determined. Reported book value, earnings, and cash flow are, after...
- Graham And Dodd Quote
From Security Analysis, 1940 edition: “The essential point is that security analysis does not seek to determine exactly what is the intrinsic value of a given security. It needs only to establish either that the value is adequate—e.g., to protect...
- Graham And Dodd Quote
From Security Analysis, 1940 edition: “These intricacies of corporate accounting and financial policies undoubtedly provide a broad field for the activities of the securities analyst. There are unbounded opportunities for shrewd detective work, for...
Money and Finance
Graham and Dodd quote
From Security Analysis, 1940 edition:
“Undervaluations caused by neglect or prejudice may persist for an inconveniently long time, and the same applies to inflated prices caused by overenthusiasm or artificial stimulants. The particular danger to the analyst is that, because of such delay, new determining factors may supervene before the market price adjusts itself to the value as he found it. In other words, by the time the price finally does reflect the value, this value may have changed considerably and the facts and reasoning on which his decision was based may no longer be applicable.
The analyst must seek to guard himself against this danger as best he can: in part, by dealing with those situations preferably which are not subject to sudden change; in part, by favoring securities in which the popular interest is keen enough to promise a fairly swift response to value elements which he is the first to recognize; in part, by tempering his activities to the general financial situation—laying more emphasis on the discovery of undervalued securities when business and market conditions are on a fairly even keel, and proceeding with greater caution in times of abnormal stress and uncertainty.
The Relationship of Intrinsic Value to Market Price. The general question of the relation of intrinsic value to the market quotation may be made clearer by the following chart, which traces the various steps culminating in the market price. It will be evident from the chart that the influence of what we call analytical factors over the market price is both partialand indirect—partial, because it frequently competes with purely speculative factors which influence the price in the opposite direction; and indirect, because it acts through the intermediary of people’s sentiments and decisions. In other words, the market is not a weighing machine, on which the value of each issue is recorded by an exact and impersonal mechanism, in accordance with its specific qualities. Rather should we say that the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion.”
- Excerpt From Warren Buffett’s 1957 Partnership Letter
An excerpt from Warren Buffett’s 1957 letter that may be useful to think about in regards to current stock market levels:In last year's letter to partners, I said the following: My view of the general market level is that it is priced above...
- Graham And Dodd Quote
From Security Analysis, 1940 edition:To sum up this discussion of qualitative and quantitative factors, we may express the dictum that the analyst’s conclusions must always rest upon the figures and upon established tests and standards. These figures...
- Seth Klarman Quote
From Margin of Safety(Source):Many investors insist on affixing exact values to their investments, seeking precision in an imprecise world, but business value cannot be precisely determined. Reported book value, earnings, and cash flow are, after...
- Graham And Dodd Quote
From Security Analysis, 1940 edition: “The essential point is that security analysis does not seek to determine exactly what is the intrinsic value of a given security. It needs only to establish either that the value is adequate—e.g., to protect...
- Graham And Dodd Quote
From Security Analysis, 1940 edition: “These intricacies of corporate accounting and financial policies undoubtedly provide a broad field for the activities of the securities analyst. There are unbounded opportunities for shrewd detective work, for...