Money and Finance
- 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...
- Ben Graham Quote
Timeless thoughts from a 1959 speech, much of which probably could be said today as well: Speculative Excesses in the Current Market In this connection, I arrive finally at a “law” about human nature that cannot be repealed and it is unlikely to be...
- Graham And Dodd Quote
Just as relevant today as it was in 1940:“…it is important to note that mass speculation can flourish only in such an atmosphere of illogic and unreality. The self-deception of the mass speculator must, however, have its element of justification....
- Graham And Dodd Quotes
From Security Analysis, 1940 edition. “If the analyst is convinced that a stock is worth more than he pays for it, and if he is reasonably optimistic as to the company’s future, he would regard the issue as a suitable component of a group investment...
Money and Finance
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 its attention from dividends, from asset values, and from average earnings to transfer it almost exclusively to the earnings trend, i.e. to the changes in earnings expected in the future? The answer was, first, that the records of the past were proving an undependable guide to investment; and, second, that the rewards offered by the future had become irresistibly alluring.
“Along with this idea as to what constituted the basis for common-stock selection emerged a companion theory that common stocks represented the most profitable and therefore the most desirable media for long-term investment. This gospel was based on a certain amount of research, showing that diversified lists of common stocks had regularly increased in value over stated intervals of time for many years past.
“These statements sound innocent and plausible. Yet they concealed two theoretical weaknesses that could and did result in untold mischief. The first of these defects was that they abolished the fundamental distinctions between investment and speculation. The second was that they ignored the price of a stock in determining whether or not it was a desirable purchase.
“The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd. Yet the new-era theory led directly to this thesis… An alluring corollary of this principle was that making money in the stock market was now the easiest thing in the world. It was only necessary to buy ‘good’ stocks, regardless of price, and then to let nature take her upward course. The results of such a doctrine could not fail to be tragic.”
Benjamin Graham & David L. Dodd, Security Analysis, 1934
- 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...
- Ben Graham Quote
Timeless thoughts from a 1959 speech, much of which probably could be said today as well: Speculative Excesses in the Current Market In this connection, I arrive finally at a “law” about human nature that cannot be repealed and it is unlikely to be...
- Graham And Dodd Quote
Just as relevant today as it was in 1940:“…it is important to note that mass speculation can flourish only in such an atmosphere of illogic and unreality. The self-deception of the mass speculator must, however, have its element of justification....
- Graham And Dodd Quotes
From Security Analysis, 1940 edition. “If the analyst is convinced that a stock is worth more than he pays for it, and if he is reasonably optimistic as to the company’s future, he would regard the issue as a suitable component of a group investment...