The French saying: “plus ça change, plus c’est la même chose” “The more it changes the more it’s the same thing.” I have always thought this motto applied to the stock market better than anywhere else. Now the really important part of this proverb is the phrase “the more it changes.” The economic world has changed radically and it will change even more. Most people think now that the essential nature of the stock market has been undergoing a corresponding change. But if my cliché is sound – and a cliché’s only excuse, I suppose, is that it is sound – then the stock market will continue to be essentially what it always was in the past – a place where a big bull market is inevitably followed by a big bear market. In other words, a place where today’s free lunches are paid for doubly tomorrow. In the light of experience, I think the present level of the stock market is an extremely dangerous one.
A growth company is one which (a) will be expanding its business and it profits at more than average rate, and (b) will in the course thereof be investing a large part of its profits back in the business. It’s hard to tell how good your knowledge is in these companies because growth stocks lead […]
Value has come to be associated exclusively with earning power, the stockholder no longer pays any attention to which his company owns–not even its money in the bank. It is undoubtedly true that the old-time investor laid too much stress upon book values and too little upon what the property could earn. It was a […]
More vulnerable to Type I or Type II errors? Type I error, also known as an “error of the first kind” or a “false positive”: the error of rejecting a null hypothesis when it is actually true. It occurs when observing a difference when in truth there is none, thus indicating a test of poor […]