Kilroy Was Here
December 29, 2003
Investing Point to Remember
From Benjamin Graham's The Intelligent Investor:

The True Investor

The true investor scarecely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement. (Graham, p 203)

Florida Story

I once interviewed a group of retirees in Boca Raton, one of Florida's wealthiest retirement communities. I asked these people - mostly in their seventies - if they had beaten the market over their investing lifetimes. Some said yes, some said no; most weren't sure. Then one man said, "Who cares? All I know is, my investments earned enough for me to end up in Boca." (Graham, p220)

A Two Part Appraisal Process

We suggest that analysts work out first what we call the "past-peformance value," which is based solely on hte past record. This would indicate what the stock would be worth-absolutely, or as a percentage of the DJIA or of the S&P composite - if it is assumed that its relative past performance will continue to be unchanged in the future.... The second part of the analysis should consider to what extent the value based solely on past performance should be modified because of new conditions expected in the future. (Graham, p300)

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