tailieunhanh - The Intelligent Investor: The Definitive Book On Value part 59

The Intelligent Investor: The Definitive Book On Value part 59. The purpose of this book is to supply, in a form suitable for laymen, guidance in the adoption and execution of an investment policy. Comparatively little will be said here about the technique of analyzing securities; attention will be paid chiefly to investment principles and investors’ attitudes. We shall, however, provide a number of condensed comparisons of specific securities - chiefly in pairs appearing side by side in the New York Stock Exchange list in order to bring home in concrete fashion the important elements involved in specific choices of common stocks | 566 Appendixes including to be sure some nonsegregated intangibles was 130 that it had started a 3 dividend and that I thought rather highly of the company s products and prospects. Mr. A. N. looked at me pityingly. Ben said he do not mention that company to me again. I would not touch it with a ten-foot pole. His favorite expression. Its 6 per cent bonds are selling in the low 80s and they are no good. So how can the stock be any good Everybody knows there is nothing behind it but water. Glossary In those days that was the ultimate of condemnation. It meant that the asset account of the balance sheet was fictitious. Many industrial companies notably . Steel despite their 100 par represented nothing but water concealed in a written-up plant account. Since they had nothing to back them but earning power and future prospects no self-respecting investor would give them a second thought. I returned to my statistician s cubbyhole a chastened young man. Mr. A. N. was not only experienced and successful but extremely shrewd as well. So much was I impressed by his sweeping condemnation of Computing-Tabulating-Recording that I never bought a share of it in my life not even after its name was changed to International Business Machines in 1926. Now let us take a look at the same company with its new name in 1926 a year of pretty high stock markets. At that time it first revealed the good-will item in its balance sheet in the rather large sum of million. A. N. had been right. Practically every dollar of the so-called equity behind the common in 1915 had been nothing but water. However since that time the company had made an impressive record under the direction of T. L. Watson Sr. Its net had risen from 691 000 to million over fivefold a greater percentage gain than it was to make in any subsequent eleven-year period. It had built up a nice tangible equity for the common and had split it for one. It had established a 3 dividend rate for the new stock while .