tailieunhanh - The Intelligent Investor: The Definitive Book On Value part 22

The Intelligent Investor: The Definitive Book On Value part 22. 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 | 196 The Intelligent Investor 1966 and 985 again in 1968 fell to 631 in 1970 and made an almost full recovery to 940 in early 1971. Since the individual issues set their high and low marks at different times the fluctuations in the Dow Jones group as a whole are less severe than those in the separate components. We have traced through the price fluctuations of other types of diversified and conservative common-stock portfolios and we find that the overall results are not likely to be markedly different from the above. In general the shares of second-line companies fluctuate more widely than the major ones but this does not necessarily mean that a group of well-established but smaller companies will make a poorer showing over a fairly long period. In any case the investor may as well resign himself in advance to the probability rather than the mere possibility that most of his holdings will advance say 50 or more from their low point and decline the equivalent one-third or more from their high point at various periods in the next five years. A serious investor is not likely to believe that the day-to-day or even month-to-month fluctuations of the stock market make him richer or poorer. But what about the longer-term and wider changes Here practical questions present themselves and the psychological problems are likely to grow complicated. A substantial rise in the market is at once a legitimate reason for satisfaction and a cause for prudent concern but it may also bring a strong temptation toward imprudent action. Your shares have advanced good Today s equivalent of what Graham calls second-line companies would be any of the thousands of stocks not included in the Standard Poor s 500-stock index. A regularly revised list of the 500 stocks in the S P index is available at . t Note carefully what Graham is saying here. It is not just possible but probable that most of the stocks you own will gain at least 50 from their lowest price and lose at