'We go a step further and add more information to our definition regarding key terms. 'In-depth analysis' means "the study of the facts in the light of established standards of safety and value." 'Safety of principal' means "security against loss under all normal or probable conditions or changes." Similarly, 'adequate' (or 'satisfactory') return means any rate or amount of return - no matter how low - that the investor is willing to accept, provided he acts with reasonable intelligence. (Security Analysis, 1934 edition, pp. 55-56)
Security Analysis, 1934 edition, page 310.As Graham advised in an interview, "Ask yourself, If there were no market for these stocks, would I be willing to invest in this company on these terms?" (Forbes, January 1, 1972, p. 901)
*Source: Expense Report by Steve Galshrey, Sanford C. Bernstein & Co., January 10, 2000/The stocks in this table earned an average return of 1,196.4 percent in 1999. These stocks lost an average of 79.1 percent in 2000, 35.5 percent in 2001 and 44.5 percent in 2002 – wiping out all the gains made in 1999.
'Instead of daydreaming, Stryland should have followed Graham's advice. A smart investor never sells a stock just because its value has fallen. He always first asks whether the value of the company's underlying businesses has changed.
Post a Comment