The_Intelligent_Investor

Endnotes 587

found and paradoxical observation: The more money a company makes,
the more likely it is to face new competition, since its high returns signal
so clearly that easy money is to be had. The new competition, in turn, will
lead to lower prices and smaller profits. This crucial point was over-
looked by overenthusiastic Internet stock buyers, who believed that early
winners would sustain their advantage indefinitely.

Chapter 19. Shareholders and Managements: Dividend Policy

1. Analytical studies have shown that in the typical case a dollar paid
out in dividends had as much as four times the positive effect on mar-
ket price as had a dollar of undistributed earnings. This point was
well illustrated by the public-utility group for a number of years
before 1950. The low-payout issues sold at low multipliers of earn-
ings, and proved to be especially attractive buys because their divi-
dends were later advanced. Since 1950 payout rates have been much
more uniform for the industry.

Chapter 20. “Margin of Safety” as the Central Concept
of Investment

1. This argument is supported by Paul Hallingby, Jr., “Speculative
Opportunities in Stock-Purchase Warrants,” Analysts’ Journal, third
quarter 1947.

Postscript

1. Veracity requires the admission that the deal almost fell through
because the partners wanted assurance that the purchase price would
be 100% covered by asset value. A future $300 million or more in mar-
ket gain turned on, say, $50,000 of accounting items. By dumb luck
they got what they insisted on.

Appendixes

1. Address of Benjamin Graham before the annual Convention of the
National Federation of Financial Analysts Societies, May 1958.



Acknowledgments from Jason Zweig

My heartfelt gratitude goes to all who helped me update Graham’s
work, including: Edwin Tan of HarperCollins, whose vision and
sparkling energy brought the project to light; Robert Safian, Denise
Martin, and Eric Gelman of Money Magazine, who blessed this
endeavor with their enthusiastic, patient, and unconditional support;
my literary agent, the peerless John W. Wright; and the indefatigable
Tara Kalwarski of Money. Superb ideas and critical readings came
from Theodore Aronson, Kevin Johnson, Martha Ortiz, and the staff of
Aronson + Johnson + Ortiz, L.P.; Peter L. Bernstein, president, Peter
L. Bernstein Inc.; William Bernstein, Efficient Frontier Advisors; John
C. Bogle, founder, the Vanguard Group; Charles D. Ellis, founding
partner, Greenwich Associates; and Laurence B. Siegel, director of
investment policy research, the Ford Foundation. I am also grateful to
Warren Buffett; Nina Munk; the tireless staff of the Time Inc. Business
Information Research Center; Martin Fridson, chief executive officer,
FridsonVision LLC; Howard Schilit, president, Center for Financial
Research & Analysis; Robert N. Veres, editor and publisher, Inside
Information; Daniel J. Fuss, Loomis Sayles & Co.; F. Barry Nelson,
Advent Capital Management; the staff of the Museum of American
Financial History; Brian Mattes and Gus Sauter, the Vanguard Group;
James Seidel, RIA Thomson; Camilla Altamura and Sean McLaughlin
of Lipper Inc.; Alexa Auerbach of Ibbotson Associates; Annette Larson
of Morningstar; Jason Bram of the Federal Reserve Bank of New York;
and one fund manager who wishes to remain anonymous. Above all, I
thank my wife and daughters, who bore the brunt of my months of
round-the-clock work. Without their steadfast love and forbearance,
nothing would have been possible.



Editor's note: Entries in this index, carried over verbatim
from the print edition of this title, are unlikely to correspond
to the pagination of a given e-book's software reader. Nor
are these entries hyperlinked. However, entries in this index,
and other terms, may be easily located by using the search
feature of your e-book reader software.

Index

A. & P. See Great Atlantic & Pacific 271; basic thesis about, 258; for
Tea Co. defensive investors, 117, 129–30,
258, 259, 271; and for defensive
AAA Enterprises, 144, 422, 433–37, investors, 363; do you need,
435n 272–73; fees/commissions for,
258, 262, 263, 263n, 266, 270,
Abbott Laboratories, 372 274n, 275; Graham’s views
Aberdeen Mfg. Co., 385, 387 about, 257–71; and interviewing
Acampora, Ralph, 190n, 217n potential advisers, 276–77; and
account executives. See “customers’ investments vs. speculation, 20,
28, 29; and questions advisers
brokers” ask investors, 278–29; and role
accounting firms, 14, 501 of adviser, 257; sources of,
accounting practices, 14, 169, 369; 257–71, 258n; and speculation,
563; and trust and verification
“big bath”/“kitchen sink,” of advisers, 273–75, 274n;
428n; case histories about, 422, Zweig’s comments about,
424, 424n, 425, 576–77; and 272–79. See also type of source
dividends, 493, 493n; and Aetna Maintenance Co., 144, 575–76
investor-management relations, Affiliated Fund, 230
497; and market fluctuations, age: and portfolio policy for
202n; and per-share earnings, defensive investors, 102–3,
310–21, 312n, 316n, 322, 324, 110–11n
324n, 325n, 328–29; and security aggressive investors: characteristics
analysis, 307, 308; and stock of, 6, 133, 156, 159n, 175;
options, 509n; and stock splits, definition of, 133n; “don’ts” for,
493, 493n. See also specific 133–44, 145–54; “do’s” for,
company 155–78, 179–87; expectations for,
acquisitions. See mergers and 29–34, 271; and investments vs.
acquisitions; takeovers; specific speculation, 18–34; and mixing
company aggressive and defensive, 176,
active investor. See aggressive 178; portfolio for, 101, 133–44,
investor 145–54, 155–78, 179–87; and
ADP Investor Communication preferred stocks, 98, 133,
Services, 501n
ADV form, 274, 275, 277
Advent Capital Management, 419
advice: for aggressive investors, 258,

591

592 Index

aggressive investors (cont.) American Rubber & Plastics Co., 387
134–37, 134n, 139, 140, 142, 166, American Smelting & Refining Co.,
173, 176–77, 381; psychology of,
382; recommended fields for, 387
162–75; return for, 29–34, 89; American Stock Exchange, 201, 403,
rules for, 175–78; security
analysis for, 303n, 376–95; stock 446, 450, 450n
selection for, 376–95 American Telephone & Telegraph,

Air Products & Chemicals, Inc., 67, 135, 173, 200, 289, 295–97,
450–53, 453n, 470 350, 351, 352, 354, 355, 358, 403,
410, 491
Air Reduction Co., 450–53, 453n, 470 American Tobacco Co., 289
airlines, 6, 6–7n, 7, 31, 82, 362, 364 American Water Works, 358
Alabama Gas Co., 358 Amerindo Technology Fund, 16,
Alba-Waldensian, 387 243–45
Albert’s Inc., 387 Ameritas, 110
Allegheny Power Co., 358 Ameritrade, 39
Allied Chemical Co., 289, 292, 351, AMF Corp., 315
Amgen Inc., 370
352 AmSouth Bancorp, 372
Allied Mills, 387 Anaconda, 168, 289, 351, 352, 354,
ALLTEL Corp., 372 355, 387
Altera Corp., 370 Analog Devices, 370
alternative minimum tax, 106n analysts. See financial analysts
Altria Group, 372 Anderson, Ed, 542
Aluminum Company of America Anderson Clayton Co., 387
Andreassen, Paul, 223
(ALCOA), 289, 300, 310–21, Angelica, 216
321n, 351, 352 Anheuser-Busch, 321n, 372
Alvarez, Fernando, 329 annual earnings multipliers, 295–97
Amazon.com, 21n, 41, 41n, 126, annual meetings, 489, 502
308–9, 505 annual reports, 400, 502
America Online Inc. See AOL Time annuities, 110, 110–11n, 226n
Warner AOL Time Warner, 14, 306, 442–43,
American & Foreign Power Co., 413, 497, 505
415 Apple Computer Inc., 510, 510n
American Brands Co., 351, 352 Applegate, Jeffrey M., 81
American Can Co., 289, 351, 352, Applied Materials, 370
354, 355, 564–65 Applied Micro Devices, 370
American Electric Power Co., 357 appreciation, 25, 26, 52, 135
American Financial Group, 466n arbitrages, 32, 32–33n, 174, 175,
American Gas & Electric Co., 97 380–81, 395
American Home Products Co., Archer-Daniels-Midland, 372, 387
453–55, 455n, 470 Ariba, 478
American Hospital Supply Co., Aristotle, 76
453–55, 455n, 470 Arnott, Robert, 85n, 506, 506n
American Machine & Foundry, 315 artwork, 56
American Maize Products, 385, 386, “as if” statements. See pro forma
387 statements
American Power Conversion, 370

Index 593

Asness, Clifford, 506, 506n balance sheets, 200, 285, 308, 317n,
asset allocation: and advice for 331, 337, 340, 365, 392. See also
specific company
investors, 273, 275, 278; and
aggressive investors, 133, balanced funds, 226
156–57; and defensive investors, Baldwin (D. H.), 387
22–29, 89–91, 102, 103–5; 50–50 Ball Corp., 216, 482–83
plan of, 5, 90–91, 156–57; and Baltimore Gas & Electric Co., 358
history and forecasting of stock BancBoston Robertson Stephens, 443
market, 75; and inflation, 47–48; Bank of America, 372
and institutional investors, 194, Bank of New York, 82
194n; and investments vs. Bank of Southwark, 141n
speculation, 10; and market Bankers Trust, 235n
fluctuations, 194, 197; tactical, bankruptcy, 14, 16n, 144, 419–20n;
194, 194n. See also
diversification and aggressive investors, 144,
asset backing. See book value 146, 156n, 174–75, 187, 384; of
assets: elephantiasis of, 246, 251, 252; brokerage houses, 266–68; case
and per-share earnings, 317n, histories about, 422–37, 423n;
320n; and security analysis, 281, and defensive investors, 100,
285; and stock selection for 111, 362; and history and
aggressive investors, 381–82, forecasting of stock market, 70,
383, 385, 386, 388, 390, 391, 82; and investment funds, 235,
391n, 392, 398, 400; and stock 250; and market fluctuations, 4,
selection for defensive 4n; and price, 423n; of railroads,
investors, 338, 348, 349, 355, 4, 4n, 362, 384, 423n; and
356, 360, 365, 369, 370, 371, security analysis, 286, 287. See
374–75. See also asset allocation; also specific company
specific company banks, 210, 414, 422; and advice,
Association for Investment 258n, 268–70, 271; amd delivery
Management and Research, and receipt of securities, 268–69,
264n, 280n 268n; and dividends, 493;
AT&T Corp., 410n. See also American investing in, 360–61; and
Telephone & Telegraph investment funds, 235; and new
Atchison, Topeka & Santa Fe, 135, offerings, 269; and stock
206, 209 selection for defensive
Atlantic City Electric Co., 358 investors, 361; trust
Aurora Plastics Co., 393, 395 departments of, 4, 29, 231, 235,
Automatic Data Processing, 372 258–59, 259n. See also type of
automobile stocks, 82 bank or specific bank
Avco Corp., 412 Barber, Brad, 149, 150n, 151
Avery Dennison Corp., 372 Bard (C.R.), 372
Avon Products, 456 bargains: and aggressive investors,
133–34, 155, 156, 166–73, 175,
Babson’s Financial Service, 259 177–78, 186, 380n, 381–82, 389,
Baby Center, Inc., 444 390–93; and bonds, 166, 173,
Bagdad Copper, 387 173n; and common stock,
balance-sheet value. See book value 166–73, 177; and defensive
investors, 89, 96, 350; definition

594 Index

bargains (cont.) Blodget, Henry, 40–41, 343–44
of, 166, 177; and investment vs. Blue Bell, Inc., 455–58, 456n, 470
speculation, 33–34; and margin Bluefield Supply Co., 387
of safety, 517–18; and market BOC Group, 453n
fluctuations, 202, 206; and Bogle, John, 510
preferred stocks, 166, 173; in bond funds, 106–7, 110, 226, 283n,
secondary companies, 170–73,
172n, 177–78; and value, 177 420, 420n
Bond Guide (Standard & Poor’s), 423
Baruch, Bernard M.: 125 DEL bonds: and advice, 259, 261, 269,
Bausch & Lomb Co., 234
Baxter Healthcare Corp., 455n 271; and aggressive investors,
BEA Systems, Inc., 323 133–35, 134n, 136n, 139, 140,
bear markets, 46, 140n, 228n, 421, 155, 166, 173, 173n, 174–77; and
asset allocation, 10, 22–29,
525; and aggressive investors, 89–91; and bargains, 166, 173,
140n, 382; and defensive 173n; calls on, 97–98, 139; and
investors, 89, 105, 111, 124, 131, characteristics of intelligent
367, 371; and history and investors, 13; common stocks
forecasting of stock market, compared with, 5n, 18–29,
65–72, 74, 80–87, 210; and 56–57, 194; and convertible
market fluctuations, 192–93, issues and warrants, 210–11,
193n, 194, 210, 224; silver lining 406, 412, 413, 415, 417; coupons
to, 17, 17n for, 98, 98n, 134, 134n, 135, 139;
“beating the market/average,” 9–10, “coverage” for, 284; defaults on,
12, 76, 120, 157–58, 157n, 88–89n, 173, 287, 423, 521; and
158–59n, 219–20, 237, 249, defensive investors, 22–29,
250–52, 255, 275, 376–77, 377n, 89–100, 101–11, 112n, 113, 114,
379n, 397, 537–38 114n, 119, 121–22, 124, 125, 131,
“beating the pros,” 217–20, 249n 176, 347, 350, 365; discount,
Becton, Dickinson, 372 136n; distressed, 155–56n; and
Belgian Congo bonds, 138 diversification, 283n; earnings
Bender, John, 147 on, 283–87; and Graham’s
Benjamin Graham Joint Account, business principles, 523; and
380n history and forecasting of stock
Berkshire Hathaway, 162n, 217, market, 70, 75, 76, 77, 78, 80, 82,
217n, 317n, 327, 401, 543, 544 87; inflation and, 5, 26, 47, 48,
Bernstein, Peter L., 55n, 529–30 50, 51, 56–57, 58n, 60n, 61n, 110;
Bernstein, William, 2n, 55n, 85n interest on, 2, 3, 5, 22–29, 70, 76,
Bethlehem Steel, 289, 351, 352 77, 78, 89, 93–94, 95, 98, 98n,
Bickerstaff, Glen, 245 113, 121–22, 134n, 146, 207–12,
Big Ben Stores, 387 515, 515n, 516; and investment
Binks Manufacturing Co., 387 funds, 226, 241; and
bio-technology stocks, 369 investments vs. speculation,
Biogen Inc., 370 18–22; long- and short-term,
Biomet Inc., 370 91–92, 106–7, 188; and margin
Birbas, Nicholas, 39 of safety, 512–13, 514, 515, 515n,
Black & Decker Corp., 330n 516, 520; and market
Block, Stanley, 264n fluctuations, 188, 193, 194,

Index 595

207–12; and new offerings, 8, defensive investors, 117, 120,
139, 140; price of, 23–24, 135, 129; volume of trades in,
136n, 207–12; ratings for, 95, 266–68. See also online trading;
210, 211, 283n, 350n; and risk, specific house
283–87; and role of investment brokerage transactions: delivery of,
bankers, 268; safety of, 283–87; 267–268, 267–68n
second-grade, 134–37, 139, 145, Bronson, Gail, 444n
147; and security analysis, 281, Brooklyn Union Gas Co., 358
283–87, 293–94, 298n; selling at Brooks, John, 266n
par, 137; and size of enterprise, Brown Shoe, 484–85, 484n
285; taxes and, 22–25, 91–92, 93, Browne, Christopher, 397
94, 95, 96, 96n, 99, 106, 106n, Buffett, Warren E.: and
155, 520; types of, 91–98; yield diversification, 290n; and
on, 5, 8–9, 27, 78, 89, 91, 92, 93, GEICO, 533n; and indexing
95, 96, 97, 98, 113, 114n, 124, 125, funds, 249, 249n; and investors’
134, 138, 146, 193, 207–12, 404, relationship with company,
408n, 573. See also bond funds; 162n; and market fluctuations,
convertible issues; specific 217, 217n; and “owner
company or type of bond earnings,” 399; and per-share
book value, 420, 451n, 569; and earnings, 327; preface by, ix–x;
aggressive investors, 289, 381, and security analysis, 308;
383–84, 389, 389n, 393; and selection methods of, 400, 401;
defensive investors, 348, 349, “Superinvestors of Graham-
351, 352–53, 354, 355, 359, and-Doddsville” talk by,
374–75; definition of, 374; and 537–60. See also Berkshire
market fluctuations, 198–200, Hathaway
198n, 203n; and per-share Buffett Partnership, Ltd., 543, 552
earnings, 320n, 321. See also bull markets, 55, 170, 233, 525, 570;
specific company and bargains, 170, 172, 177;
books, 56, 80–81 characteristics of, 140, 192–94;
Borden Inc., 393, 395 and convertible issues and
Boskin Commission, 58n warrants, 404, 405, 405n, 408;
brain: and market fluctuations, and dealings with brokerage
220–23 houses, 139, 267; death/end of,
brand names, 304, 374 17, 142, 210; history and
Brearley, Richard A.: 61 DEL forecasting of, 65–73, 74, 76, 78,
bridge players analogy, 378–79 80–87, 210; length of, 193n; and
brokerage houses: and advice, 117, market fluctuations, 192–94,
257, 258n, 261–65, 262–63n, 193n, 194, 197, 210; and new
266–68, 271, 274; discount, 129, offerings, 140, 140–41n, 142, 143,
149, 262–63n; fees/commissions 144; and portfolio policy for
of, 117, 128–29, 128n; financial aggressive investors, 140,
troubles of, 4, 4n, 266–68; full- 140–41n, 142, 143, 144, 170, 172,
service, 262–63n; margin 177
accounts with, 21n; as part of Bunker Ramo Corp., 330n
financial enterprise industry, Burlington Northern Railroad, 362n
360n; and portfolio policy for Burton-Dixie Corp., 393

596 Index

Bush, George W., 496, 507n Zweig’s comparison of eight
business: buying the, 546; definition pairs of companies, 473–86
cash/“cash equivalents”: and
of good, 308; knowing your, 523 aggressive investors, 398, 400;
business principles: of Graham, and defensive investors, 24, 25,
102, 103–4, 105, 107, 109–10,
523–24 124; and history and forecasting
“businessman’s investment,” 136–37 of stock market, 82; and
BusinessWeek, 20n, 81, 505 security analysis, 303, 303–4n,
buy-low-sell-high approach, 192–94 308
“buy what you know,” 125–27, 126n “cash in on the calendar,” 41–42, 46
buying back shares. See repurchase Cassidy, Donald, 253
Caterpillar, 46
plans Center for Research in Security
buzzwords, investing, 172n Prices (University of Chicago):
30DEL
C.-T.-R. Co., 565–66 Central Hudson Gas and Electric
Cable & Wireless, 346 Co., 358
California Public Employees’ Central Illinois Light Co., 358
Central Maine Power Co., 358
Retirement System, 146 Century Telephone Inc., 372
calls, 97–98, 139, 406n, 407–8, 407n, certificates of deposit, 97, 107, 108–9
certificates, stock, 198, 198n, 495,
421 495n
capital, 53, 302, 308–9, 320, 320n, Certified Financial Planner (CFP),
276n
324–26, 401, 404, 414. See also CGI (Commerce Group, Inc.),
capital gains; capitalization; 481–82
return on invested capital Chambers, John, 184
(ROIC); specific company charitable institutions, 47, 47n
capital gains, 227, 571–72; and Chartered Financial Analyst (CFA),
market fluctuations, 219, 224n; 264n, 265, 265n
and portfolio for aggressive Chase Manhattan Bank, 450n
investors, 149, 180n; taxes on, Checkers Drive-In Restaurants, 216
75, 180n, 219, 360, 561, 562 chemical companies, 291, 291n, 292
Capital One Financial Corp., 477–79, Chesterton, G. K., 87
479n Cheung, Alexander, 15, 15–16n
capitalization, 123, 123n, 236, 288, Chicago and Northwestern Railway
290–95, 331, 340, 384, 413, 414, Co., 317n
415 Chicago, Milwaukee, St. Paul and
Career Academy, 234 Pacific bonds, 135
Carnegie, Andrew, 185 China: stock market in, 437n
Carnival Corp., 167n Chiron Corp., 370
Carolina Power & Light Co., 358 Chromatis Networks, 439–40
Carter, Jimmy, 60n Chrysler Corp., 165, 167, 168, 250,
case histories: and Graham’s 289, 293, 351, 352, 354
comparison of eight pairs of Chubb Corp., 372
companies, 446–72; Graham’s
discussion of four “extremely
instructive,” 422–37; Graham’s
examples of, 575–78; Zweig’s
comments on four “extremely
instructive,” 438–45; and

Index 597

CIBC Oppenheimer, 40–41 term prospects for, 291; general
Cincinnati Gas & Electric Co., observations on, 335–38; as
growth stock, 115–17, 157–62,
358 295–98, 517; and history and
Cingular Wireless, 327 forecasting of stock market, 70,
Cisco Systems, Inc., 14, 81, 116n, 184, 73, 74, 75, 76, 78; inflation and,
47–57; investment merits of,
217n, 247, 473–75, 505 112–14; investment rules for,
Cleveland Electric Co., 357 175–78; and investments vs.
CleveTrust Realty Investors, 414 speculation, 18–22; investor’s
Clorox Co., 372 personal situation and, 119–21;
closed-end funds, 141n, 226, 226n, as “junior stock issues,” 285n;
and margin of safety, 513–18,
227, 238–41, 252–53, 253n, 420, 571, 574; and market
495n fluctuations, 188, 189, 193, 194,
CMGI, Inc., 215, 217, 481–82, 481n 195–97, 199–200, 201, 203, 205;
CNBC, 342n performance of, 229; portfolio
CNF Inc., 330n changes in, 117; price decline in,
CNN, 255 3; price record of, 406; public
Coca-Cola, 217, 224, 224n, 304, 307, attitude toward, 19–20, 20n;
372, 401 return on, 113, 377; and risk,
Cohen, Abby Joseph, 190n 20–21, 121–22, 394; security
Cohen & Steers Realty Shares, 63 analysis of, 281, 285, 288–301,
coin flipping, 538, 539, 540 330–38, 339–46; selection of,
coins, buying and selling, 56 114–15, 134, 136, 139, 155, 156n,
Colgate-Palmolive, 321n 157, 158, 160, 166, 169, 176–77,
College Marketing Group, 481n 178, 347, 348–66; valuation of,
Columbia Gas System, 357 288–90, 569–70; Value Line
Columbia Real Estate Equity Fund, Forecast (1967–69) about, 289.
63 See also specific topic
Comerica Inc., 372 Commonwealth Edison Co., 357
Comiskey, Eugene, 329 companies: change in character
Commerce One, Inc., 477–79 of, 203; comparison of eight
commercial banks, 97, 231, 257, 270, pairs of, 446–72, 473–86;
360n, 429, 429n comparison of four listed,
common stock: and advice, 269, 271; 330–38, 339–46; emotional
for aggressive investors, 134, imagery of, 474; general
136, 139, 155–78, 156n, 376–95; observations about, 469–72;
and asset allocation, 10, 89–91, investors’ relationship with,
156–57; bonds compared with, 162, 162n, 203; Johnny-One-
5n, 18–29, 56–57, 194; Note, 304; with large amounts
characteristics of, 156; for of convertible issues (1969), 412;
defensive investors, 22–29, “large, prominent,
89–91, 99, 111, 112–23, 124–32, conservatively financed,”
176, 337–38, 347, 348–66; 122–23, 195; second-line, 196,
dividends on, 22, 99, 114–15, 196n; unpopular large, 163–66,
285n, 294–95, 334, 570, 571, 572; 168, 183. See also case histories;
earnings on, 115, 288–301, 569;
expected growth (1963 and
1969) of, 295–97; general long-

598 Index

companies (cont.) corporations: debt of, 53–54, 134;
corporations; secondary and fluctuations in bond prices,
companies; specific company 211–12; governance of, 206–7,
206n; investors’s relationship
computer industry, 6–7, 30, 172, with, 162, 162n, 203; “large,
172n, 437 prominent, conservatively
financed,” 122–23, 195;
Comverse Technology, 186 misleading reporting by, 236;
ConAgra Foods, 372 taxes on, 99, 99n, 177;
Cone Mills, 391 unpopular large, 163–66, 168,
conflicts of interest, 497, 500 183. See also companies;
conglomerates, 3, 411, 438, 440 corporate bonds; specific
Conseco, 14, 426n corporation
Consolidated Edison, 357, 372,
costs. See expenses/costs;
567–68 fees/commissions
Consolidated Gas of New York,
coupons, 98, 98n, 134, 134n, 135, 139
567–68 Cowles Commission, 65, 66
Consolidated Natural Gas Co., Cramer, James J., 16, 16n, 217n
Crandall, Pierce & Co., 193n
357 crash, stock market: of 1929, 191,
Consolidated Rail Corp. (Conrail),
236; of 1987, 141n, 401, 507n; of
425n 2000, 14, 124, 141n, 173n, 291n,
Consolidation Coal, 293 437n
consumer-finance firms, 360n credit companies: investing in,
Consumer Price Index, 58n, 59 360–61
Consumers Power Co., 358 credit ratings, 134, 160, 420n, 573
contract: investment owner’s, 219, Criterion Insurance Co., 533n
CSX Corp., 362n, 425n
225, 529 “customer financings,” 439, 440
convertible issues: and aggressive “customers’ brokers,” 263, 264, 271

investors, 134, 173n, 381; and “Daddy-Knows-Best,” 490n, 503–4
defensive investors, 90, 97, 99, Damasio, Antonio, 223
100; example of working of, Dana Corp., 375
418–19n; Graham’s discussion Dante Alighieri, 535–36
about, 403–13; as junior to other Data General Corp., 342
long-term debt, 419–20n; and Davis, Christopher, 308, 397, 398,
market fluctuations, 210–11;
and per-share earnings, 316, 399, 400
318, 411, 414, 416; Zweig’s Davis Funds, 250, 397, 398, 399, 400
comments about, 418–21. See day trading, 37, 39, 40n, 148, 528n
also warrants; specific company Dayton Power & Light Co., 358
Cooper Industries, 461n debt: and aggressive investors, 385;
corporate bonds, 24, 403, 520; and
aggressive investors, 134n; corporate, 53–54, 134; and
and defensive investors, 92, defensive investors, 348, 349,
95, 111, 350n; and inflation, 352–53, 355, 370, 371; and
50; and investment funds, 241; dividends, 492; of emerging
and market fluctuations, markets, 108–9; limit on, of U.S.
203–4, 207–12; return on,
404–5n; and security analysis,
283, 283n

Index 599

government, 94, 96; and margin Dimson, Elroy, 61n, 82, 113n
of safety, 513; of public utilities, direct purchase of stock, 128–29
348; and security analysis, 303, directors, 309, 414, 488, 498, 499n,
308; and selection of stock, 348,
349, 352–53, 355, 370, 371, 385. 500, 501, 502, 511
See also bonds; specific company discount brokerage houses, 129, 149,
or type of bond
Deere & Co., 173 262–63n
defaults, 287, 521; and bargains, 173, Discover Brokerage, 38–39
173n; on bonds, 88–89n, 173, diversification, 56, 87, 283n, 420; and
287, 423, 521; and portfolio
policy for aggressive investors, advice, 259n, 273; and
138, 145, 147, 155–56n, 173, 173n aggressive investors, 145, 173n,
defensive investors: characteristics 381, 387–90, 391, 392–93; and
of, 6; definition of, 22; defensive investors, 114, 129,
exclusions for, 176–77; 129n, 130, 347, 365, 368–69, 371;
expectations for, 22–29; and and delisted stocks, 385n; and
inflation, 47–57; and formula trading, 45; and
investments vs. speculation, Graham’s disciples, 542;
18–29; and margin of safety, importance of, 532, 535n; and
515–16, 524; and market investment funds, 239, 245, 253;
fluctuations, 199–200; and and investments vs.
mixing aggressive and speculation, 37; and margin of
defensive, 176, 178; portfolio safety, 515, 516, 517, 518–19,
for, 89–100, 101–11, 112–23, 519n, 521, 522, 529, 531; and
124–32; return for, 22–29, 25n, market fluctuations, 219; and
27, 176; rules for, 176–77; and security analysis, 283n, 290,
security analysis, 294–95, 290n
347–66; selectivity for, 363–66; dividends: academic criticism of,
stock selection for, 347–66, 385n; 494, 494n; and advice, 258, 264n;
Zweig’s comments about, and bargains, 166, 169, 172;
367–75. See also specific topic cumulative or noncumulative,
deflation, 51, 58n, 61n 99; and earnings, 493–94, 506,
delisted stocks, 385n 506n; and expectations for
Delmarva Power & Electric Co., 358 defensive investors, 22–24, 25,
Deltona Co., 234 25n, 26, 27; fixed, 99; and
depreciation, 316, 398, 492 formula trading, 44, 45;
Depression (1930s), 72, 131, 137, 170, Graham’s comments about,
203, 213, 417, 521 489–96; and growth, 490,
Detroit Edison Co., 357 491–92, 506; and history and
diamonds, 56 forecasting of stock market, 65,
dilution: and convertible issues and 67, 69–70, 71, 72, 76, 77, 78, 80n,
warrants, 411, 416, 417; and per- 85; inflation and, 48, 50, 52, 55;
share earnings, 311–12, 312n, and investor-management
315, 316, 316n, 317, 318; and relations, 489–96, 490n, 503–4,
repurchase plans, 507n, 508. See 511; and margin of safety, 514,
also specific company 516, 523; and market
fluctuations, 191, 193, 202, 205,
207, 509n; overview about,
489–96; and “payout ratio,”

600 Index

dividends (cont.) Dow Jones Industrial Average
294n, 489n; and per-share (DJIA): aggressive investors
earnings, 323; and performance and, 136, 158, 161, 163, 164,
(1871–1970), 71; and portfolio 164n, 165–66, 171, 376, 387–90;
policy for aggressive investors, and bargains, 171; “best” stocks
134n, 136, 137, 145n, 166, 169, in, 363; and comparison of four
172; and portfolio policy for listed companies, 332, 333, 334,
defensive investors, 43, 91, 98, 335–36; defensive investors and,
99, 99n, 111, 113, 113–14n, 91, 113, 114–15, 115n, 118, 347,
114–15, 115n, 116, 118, 121, 122, 350–54, 356, 363, 367; and
128; and price, 490, 491, 494n; dividend return on common
proper stock, 493; record of stocks, 22; in early 1970s, 4,
paying, 114–15, 115n; 72–79; and expectations for
reinvestment of, 128, 489–92; of investors, 23, 24, 25, 27, 27n, 28,
secondary companies, 172; and 33, 34; and formula trading, 44,
security analysis, 283, 285n, 288, 46; growth of, 297; and growth
294–95, 298, 298n, 302, 309; stocks, 158; and history and
special, 494n; and speculation, forecasting of stock market, 66,
489, 490, 570, 571, 572; and 67, 69, 70–71, 72–73, 74, 75, 76,
stock selection for aggressive 78, 79, 81; inflation and, 50,
investors, 384, 386, 388, 390; and 51–55, 57; and investment
stock selection for defensive funds, 231, 231n, 233; and
investors, 337, 348, 349, 350, market fluctuations, 190n,
351, 352–53, 356, 356n, 362, 365, 191–92, 193n, 195, 196, 200, 201,
371, 372; stock split and, 492–96, 202, 208; and per-share
493n; taxes on, 22–23, 24–25, 99, earnings, 319–21; and Raskob’s
294n, 495–96, 496n, 507n, 561, prescription, 2; rise of
562; total dollar amount of, by (1915–70), 50; and security
U.S. stocks, 503n; and volatility, analysis, 289, 291, 292, 294,
509, 509n; who pays, 504; 295–97, 299; and selection of
Zweig’s comments about, stocks, 347, 350–54, 356, 363,
502–6. See also yield; specific 367, 376, 387–90; and unpopular
company or type of security large companies, 163, 164, 164n,
165–66; yield of stocks (2003)
Dixon, Richard, 47n on, 5n. See also specific company
Dodd, David, 542; See also Security
“Dow Theory,” 3, 33, 191–92, 195
Analysis (Graham and Dodd) Dreman, David, 374, 400
“Dogs of the Dow,” 164, 164n Drew, Daniel, 312n
dollar-cost averaging, 2, 28–29, 75, Drexel Burnham Lambert, 164n, 187,

118, 130–31, 131n, 180n, 194, 429n, 488n
529 Drexel Firestone Co., 164, 164n
Dollar General stores, 368 Dreyfus Fund, 230
Donaldson, Lufkin & Jenrette, 443 drug industry, 30
Donnelley (R.R.) & Sons, 372 Du Pont Co., 289, 292, 351, 352
dot.com stocks, 172n, 530 Du Pont, Glore, Forgan & Co.,
Double Click Inc., 418–19n
Dover Corp., 372 266n
Dow Chemical Co., 317 dual-purpose funds, 228, 228n

Index 601

due diligence, 274, 275, 375, 375n earnings-covered test, 283–87
Dundee, Angelo, 145 Eastman Kodak Co., 46, 289, 351,
Durand, David, 199n, 570
352
e*Trade, 126 EDGAR database, 186, 250, 302–3,
“earning power,” 53, 513, 513–14n,
306–7, 324n, 375, 399, 438n
514–15, 514n, 515–16, 517, 518, Edison Electric Light Co., 21n
568 Edward VII (king of Great Britain),
earnings: and advice, 264n; average,
319–21; and bargains, 166, 313, 313n
167–69, 173; on capital funds, “efficient markets hypothesis”
320, 320n; “consensus” about,
374; debt and profits on capital (EMH), 363, 363n, 380, 380n
(1950–69), 53; and dividends, Electric Autolite Co., 330
493–94, 506, 506n; and Electronic Data Systems, 375
expectations for investors, 25n, electronics industry, 30, 172, 172n,
27, 33; hiding true, 428n; and
history and forecasting of stock 337, 437
market, 65, 69–70, 71, 72, 76, 77, Elias, David, 80
78, 85, 86; inflation and, 49, Ellis, Charles, 101, 256, 526n
51–55; and margin of safety, eltra Corp., 330–38, 330n, 383
513, 515n, 516–17; and market EMC Corp., 160n, 339–46, 342n
fluctuations, 200, 202; owner, emerging-market nations, 108–9,
308, 398, 399; and per-share
earnings, 315–16, 316–17n; and 148, 148n
performance (1871–1970), 71; Emerson, Ralph Waldo, 396
and portfolio policy for Emerson Electric Co., 330–38, 330n,
aggressive investors, 134, 135,
136, 140, 146, 147, 160, 163, 165, 335n, 339–46, 372
166, 167–69, 172, 173, 181, 182, Emery Air Freight, 330–38, 330n,
183; and portfolio policy for
defensive investors, 115, 115n, 336–37n
116; real, 424; and repurchase Emhart Corp., 330–38, 330n, 383
plans, 507, 509n; and security employee-purchase plans, 432, 433n
analysis, 281, 283, 284, 288, 290, employees: stock options for, 323.
291, 292, 293, 294, 295, 296, 298,
305, 308; and speculation, 569; See also managers/management
and stock selection for endowment funds, 194, 194n, 235,
aggressive investors, 382–83,
384, 386, 388, 390, 392, 400; and 235n
stock selection for defensive “enhancing shareholder value,” 309,
investors, 337, 348, 349, 352–53,
354, 356, 364, 365, 371, 374. See 508–9, 508n
also “earning power”; per-share Enron Corp., 14, 127, 423n, 429n,
earnings; price/earnings ratio;
specific company or type of 497, 500–501
security enterprising investors. See

aggressive investors
EPS. See per-share earnings
Erie Railroad, 312n
ethics, 143n, 262, 262n, 269, 276n,

280
eToys Inc., 443–45, 443–44n
Eversharp Co., 409
exchange-traded index funds

(ETFs), 226n, 253, 253n
Exodus Communications, Inc.,

339–46

602 Index

Expeditors International of Fidelity Funds, 15n, 37, 63, 64, 107,
Washington, Inc., 307, 339–46 110, 125, 148n, 230, 245–46, 250,
400, 420, 420n
expenses/costs: controlling
ownership, 219; and convertible 50–50 plan, 5, 90–91, 156–57
issues and warrants, 419n, 420, financial analysts, 14, 264n, 498n,
420n; of doing business, 317n; of
investment funds, 247, 248, 249, 501n; and advice, 262n, 263,
251, 252, 253, 254; of mutual 264–65, 271; collective
funds, 376–77, 377n; of options, intelligence of, 380n; consensus
421; and per-share earnings, opinion of, 378; as creating
317n; of research, 376–77, 379n; valuation, 568, 570; flaw in
and stock selection for approach to selection by, 379;
aggressive investors, 376–77, and forecasting, 265n; functions
377n, 379n; and stock selection of, 263, 265, 265n, 378; and
for defensive investors, 367; of institutional investors, 265n;
trading, 363n, 377n, 379n, 385n. and investments vs.
See also fees/commissions speculation, 28–29; and margin
of safety, 517; and market
Factiva, 399 fluctuations, 190, 206;
“fair-weather investments,” 521 requirements for, 264; role of,
Fama, Eugene, 504 263, 280–81; senior and junior,
Family Dollar Stores, 216, 372 300; and speculation, 563, 568,
Farley, William, 317n 570, 574; and stock selection for
Fastow, Andrew, 500–501 aggressive investors, 376, 378;
Faust (Goethe), 415–16 and stock selection for
favorite stocks, 247, 247n defensive investors, 363. See also
Fedders Co., 234 securities analysis
Federal National Mortgage financial condition: and common
stock, 293–94; and dividends,
Association (“Fannie Mae”), 110 492; and security analysis, 302,
Federal Reserve Board, 2n, 19–20n, 308–9; and stock selection for
aggressive investors, 384, 385,
50, 121 386, 388, 401; and stock
fees/commissions: for advice, 258, selection for defensive
investors, 337, 348, 349, 350,
262, 263, 263n, 266, 270, 274, 369. See also specific company
274n, 275; for aggressive Financial Corp. of America, 187
investors, 145n, 148–50, 148n, financial developments: major,
149n, 180n; of brokerage 14–15
houses, 117, 128–29, 128n; financial institutions/industry,
controlling, 219; and convertible 139, 269, 360–61, 411n. See also
issues and warrants, 419n; of type of institution or specific
investment funds, 227, 227n, institution
238n, 242, 246, 247, 249n, 250, financial markets: history and
253n; and IPOs, 139n; and forecasting of, 1–2, 10, 24n, 54,
market fluctuations, 200, 219; 54n, 65–79, 80–87. See also stock
and portfolio changes, 117; on market
reinvestments, 253n; and financial plan, 273, 278
timing, 180n. See also
expenses/costs

Index 603

financial planners, 129, 258n, 259n, and pricing of, 189–92, 206; and
263n, 270n, 274, 274n, 276 valuation, 188, 189, 195–207,
211, 212–13
financial reports. See financial FMC Corp., 545–46, 559–60
statements; specific report Food and Drug Administration,
U.S., 167n
financial service “The Foolish Four” trading, 44–46
organizations/industry, 259–62, footnotes to financial statements,
360n 315, 328–29, 328n, 399, 432, 439
Forbes magazine, 185, 185n, 337n
financial statements, 236, 324n, forced sale of stock, 203, 204
328–29, 328n, 399, 432, 439, 442, forecasting: addiction to, 221, 223;
509n. See also per-share and advice, 260–61; and
earnings; security analysis; type aggressive investors, 179–80,
of report 184, 378; and “consensus”
earnings, 374; and defensive
First Tennessee National Bank, investors, 131–32, 364, 364n,
372 374; and financial analysts,
265n; and history of stock
Firsthand mutual funds, 81, 126, market, 72–79, 80–87; of
243–45 inflation, 48, 50, 54, 54n; and
investment funds, 255; and
Fischhoff, Baruch, 127 investments vs. speculation,
Fisher, Kenneth, 185n 24n; and market fluctuations,
Fisher, Lawrence, 67n 189–92, 190n, 206, 210; and
fixed-value investments, 512–13. See Raskob’s prescription, 2;
reliability of, 10; and security
also type of investment analysis, 281, 282n, 288–89,
Fleet Boston Financial Corp., 384n 291n, 293n, 298, 299; and
Florida real estate, collapse of, 144 selection of stock, 364, 364n,
fluctuations, market, 4, 188–225, 374, 378; and speculation, 572;
and timing, 179–80; the
236n, 509n; and aggressive unpredictable, 378
investors, 33; and asset foreign stocks/bonds, 134, 138, 148,
allocation, 197; in bond prices, 148n, 176–77, 186–87, 239–40,
207–12; book value and, 250, 252
198–200, 198n, 203n; and brain, formula investing/trading, 28–29,
220–23; and buy-low-sell-high 41–46, 90–91, 192. See also
approach, 192–94; and specific formula
defensive investors, 189; formula plans/planners, 194–95,
example of, 200–205; and 195n
forecasting, 189–92, 190n, 206, formula timing, 156–57
210; and formula investment Fortune 500 list, 181, 426n, 500
plans, 194–95, 195n; as guide to Four Seasons Nursing, 234
investment decisions, 189–92; 401(k) plans, 64, 104, 105, 106, 111n,
history of (1871–1972), 65–72; of 126–27, 147, 215, 249
investor’s portfolio, 195–97; FPA Capital Fund, 397, 400
managers and, 206–7; and
margin of safety, 525; and
mispricing of stock, 212–13;
Morgan’s comments about, 54,
54n; and Mr. Market parable,
204–5, 212–25; and other
people’s mistakes, 221, 223;
silver lining to, 17, 224; timing

604 Index

“franchise” companies, 172, 172n, Goldman Sachs & Co., 404n, 443
374, 401, 422, 433–37 good decisions: factors that

Franklin, Benjamin, 124, 505 characterize, 528–29
Franklin Utilities, 354n Goodbody & Co., 266n
fraud, 14, 236, 324n, 369, 413, 429n, goodwill, 374, 389, 389n, 390, 392,

442n, 450n 398, 428, 439, 440, 441n, 453, 568
French, Kenneth, 504 Goodyear Tire Co., 289, 351, 352
French assignats, 415, 415n Gordon, Robert N., 224n
Fridson, Martin, 329 Gordon equation, 25n
Friend-Blume-Crockett study, 377, Government Employees Financial

377n Corp., 533n
friends or relatives: advice from, 270 Government Employees Insurance
Froelich, Robert, 81
Fruit of the Loom, 317n Co. (GEICO), 228n, 494, 532–33,
fund industry. See investment funds 532–33n, 535, 535n
Fundamental Investments Co., 230 Government National Mortgage
Association (“Ginnie Mae”), 110
Galbraith, Steve, 38n, 369 Graham, Benjamin: Buffett’s tribute
Galileo Select Equities Fund, 245 to, ix, x; business principles of,
Gallup Organization, 83, 84 523–24; definition of investment
Galvin, Thomas, 190n of, 19, 35, 35n, 45; disciples of,
“gambler’s fallacy,” 458n 537–60; forecasts of, 25, 25n;
gambling, 19n, 21, 36, 46, 199n, 368, misjudgements of, 49–50, 50n;
Zweig’s comments about, xi–xiv
464, 518–19, 519n, 525, 530, 535, Graham, John R., 180, 180n
535n Graham-Newman Corp., 228n,
Gannett Co., 372 380–83, 380n, 533n, 541
Gardner, John, 438 Graham-Newman methods:
Gates, Bill, 162n, 185 summary of, 380–83
GEICO. See Government Employees Graham’s Law, 46
Insurance Co. Grainger (W. W.), 372
General American Investors, 241 Great Atlantic & Pacific Tea Co.,
General Electric Co., 55, 160, 181, 200–205, 202n
182, 183, 247, 289, 295–97, 351, greed, 197, 437, 437n
352, 372, 575–73 Greenspan, Alan, 179–80
General Foods Corp., 289, 351, 352 Group Rexel, 469n
General Motors Corp., 2, 46, 166, growth, 15, 228, 264n, 414; average,
289, 292, 295–97, 351, 352, 410n 319–21; calculation of past rate
Generally Accepted Accounting of, 319–21; definition of, 157;
Principles (GAAP), 316n, 325n and dividends, 490, 491–92, 506;
Georgeson Shareholder, 501n and history and forecasting of
Gillette, 217, 304, 307, 401 stock market, 73, 85, 87, 184;
Glassman, James K., 80, 102n and margin of safety, 516, 517;
Global Crossing Ltd., 14, 127, 303, and market fluctuations, 9,
304n, 324–25, 325n, 326, 497 199n; mutual funds for, 158n,
Goethe, Johann Wolfgang Von, 159n, 161, 228n; and per-share
415–16 earnings, 319–21, 321n; and
gold, buying, 55, 55–56n portfolio policy for aggressive

Index 605

investors, 156, 157–62, 158–59n, Home Depot, 181, 182, 183
181–84; and portfolio policy for Honda, 250
defensive investors, 114, 115–17, Honeywell Corp., 330n
123; real, 85, 87; and risk, 160; Horizon Corp., 234
and security analysis, 281, 282, hostile takeovers, 32–33n, 429n, 488n
282n, 294–98, 300, 305; slow Household International, 373
down in, 321n; speculative, 85, Housing and Urban Development
87, 569, 570; and stock selection
for aggressive investors, 379, (HUD), U.S. Department of, 96n
384, 386, 390, 392, 401; and Housing Authority bonds, 94–95, 96
stock selection for defensive Houston Light & Power Co., 357
investors, 338, 347, 348, 349–50, “How much?” question, 8–9, 15
352–53, 354, 355, 356, 364, 369, Hudson Pulp & Paper, 543
371, 374; and types of investors, “human factor” in selection, 365
6–8. See also specific company Huron Consulting Group, 324n
Guerin, Rick, 544 hyperinflation, 60n
Gulf & Western Inc., 412
Gulf Oil, 488n I-bonds, 110
Ibbotson Associates, 61n, 62, 131,
H & R Block, Inc., 401, 455–58, 456n,
470 131n, 404n, 419
“In the Money” (CNN-TV),
Harley Davidson, 304
Harvey, Campbell R., 180, 180n 126n
Hassett, Kevin A., 80, 102n income, 106–7, 136, 259, 398, 419,
Hawkins, O. Mason, 399–400
Hayden, Stone & Co., 266n 421, 516, 571–72. See also specific
Haydon Seitch and Instrument Co., company
income bonds, 99–100, 136
576 income tax. See taxes
Hazlitt, William, 313n “incubated funds,” 246
hedging: and aggressive investors, indexing funds: and advice, 277n;
and aggressive investors, 180,
381; and convertible issues and 396; Buffett’s advice about,
warrants, 420n; and defensive 249n; compulsory holdings for,
investors, 106n; and definition 476; and convertible issues and
of intelligent investors, 13, 13n; warrants, 419n; and defensive
and expectations for investors, investors, 124, 130, 132, 347n,
26n, 32, 33n; and half a hedge, 367, 368, 375n; flaws of, 249;
61; and inflation, 55–56, 61; and and investment funds, 248–49,
investment funds, 226–27, 227n; 248n, 249; and market
“related” and “unrelated,” 381, fluctuations, 219; and security
381n, 382, 382n analysis, 290n; of total U.S.
Heine, Max, 396 stock market, 347n, 367. See also
Heinz (H.J.), 373 exchange-traded index funds
Hennessy funds, 44n (ETFs)
herding, 247, 546 industrial bonds, 155, 284, 285,
high-yield bonds. See junk bonds 287
Hoffman, Mark, 478, 479 Industrial National Bank of Rhode
“home bias,” 127 Island, 384, 384n
industrial stocks, 359, 387–90

606 Index

industry: analysis of, 298–99; 121–22, 364n; and expectations
predicting growth of, 6–8, 6–7n for investors, 22–29, 33; fixed,
211; and history and forecasting
inflation, 3, 24, 47–57, 58–64, 294; of stock market, 70, 76, 77, 78;
accuracy of rate of, 58n; as inflation and, 54, 55; and
dead, 58, 58n, 59–60; and margin of safety, 515, 515n, 516;
defensive investors, 23, 25n, 26, and security analysis, 283, 284,
26n, 102, 113, 114, 364n; and 298, 298n, 301, 308; and taxes,
history and forecasting of stock 99n, 100, 561, 562. See also
market, 48, 50, 54, 54n, 83, 85, specific company or type of
86, 87; and money illusion, security
59–60; nominal and real, 59; and International Business Machines
price, 49, 61, 62; protection (IBM), 6, 7, 73, 116, 116n, 160,
against, 23, 55–56, 61–64; and 199, 234, 295–97, 384, 390, 392,
Raskob’s prescription, 2n; and 456, 491, 565–67, 578
returns/yield, 50, 54, 57, 62; and International Flavors & Fragrances,
risk, 47n, 55, 57; and taxes, 50, 458–61, 458n, 470
63–64; and value, 58. See also International Game Technology, 216
type of security International Harvester Co., 289,
295–97, 351, 352, 458–61, 458n,
Informix Corp, 328–29n 460n, 470
InfoSpace, Inc., 323, 428–29n International Nickel, 289, 311, 351,
initial public offerings (IPOs), 139, 352
International Paper Co., 289, 351,
139n, 140, 140–41n, 142–43n, 353
150–54, 246, 270n, 312n, 434–35, International Telephone &
435n, 438, 444n, 528n. See also Telegraph, 412
specific company Internet: as source of advice, 258n
Inktomi Corp., 212–13 Internet companies, 6n, 14, 15,
Insana, Ron, 342n 40–41, 270n, 337n, 435n, 437n,
insider trading, 479n 508n, 530
institutional investors, 115, 194, investment banks/bankers, 141,
194n, 249n, 265n, 343, 375, 501n 360n, 428–29n; and advice, 257,
insurance companies, 177, 210, 268–70; and aggressive
211–12, 360n, 495n, 501n, 518 investors, 140, 141, 142–43n,
Intel Corp., 160n 152, 172n; and IPOs, 435n, 437;
intelligent investors: as businesslike, and reform of Wall Street, 437,
523; characteristics of, 13–14; 437n; role of, 268–70
and “controlling the Investment Company of America,
controllable,” 219; ways of 230
being, 101–2 investment contracts, 219, 225, 529
interest, 15, 258, 505n; and investment counseling firms, 20, 28,
aggressive investors, 134, 134n, 29, 258–59, 259n, 260, 270
135, 136, 140, 146, 147, 160, 173; investment funds: and advertising,
and bargains, 173; compound, 251; advice about, 231; and
570; and Cramer’s aggressive investors, 152, 159,
recommendations, 16; and 376–78; aim/purpose of, 227,
defensive investors, 89, 93–94,
95, 97, 98, 98n, 99, 99n, 100,
106–7, 106n, 109, 110, 111, 113,

Index 607

228, 229; asset elephantiasis of, investments: conventional and
246, 251, 252; and balanced nonconventional, 520;
fund investments, 241; bank- definition of, 519; expectations
operated, 4, 235; and “beating for, 22–34; “fair-weather,” 521;
the market,” 250–52, 255; Graham’s comments about,
changes in, 254; closed end vs. 18–34, 520–24; Graham’s
open end, 238–41; closing of, definition of, 19, 35, 35n, 45;
251, 252; and common stock, importance of long-term,
226, 229, 231, 236, 241, 249n; 565–66; of large sums of money,
and daring to be different, 250, 543; major change since 1964 in,
252; and defensive investors, 29, 22–24; margin of safety as
226, 360–61; dividends on, 227, central concept of, 512–24;
238; and earnings, 227, 232; opportunities for, 521, 532–34;
expenses/costs of, 227, 227n, speculation vs., 10, 18–34,
238n, 242, 246, 247, 248, 249, 35–46, 519–20; Zweig’s
249n, 250, 251, 252, 253, 253n, comments about, 35–46. See also
254; Graham’s comments about, specific topic
226–41; and growth stocks, 7,
228; and “hot” stocks, 6–7n; and investors: active and passive, 101–2;
interest, 227; managers of, 4, activism of, 460, 460n;
229–32, 245–46, 246n, 247, 249, beginning, 128; consistency of,
250, 252, 254; method of sale of, 402; controlling behavior of,
227; number of, 226; 24n, 223, 278, 529, 530; courage
overvalued, speculative of, 524, 535; definition of long-
investments of, 5; performance term, 150; discipline of, 24n,
of, 229–32, 237, 243–45, 248, 251, 105, 193n, 220, 402; and
252, 253, 254; price of, 250; dividends, 489–96; elderly, 17;
questions about, 228; rating of, emotions of, 8, 14, 19, 102, 193n;
252, 252n; registration of, 226, and “enhancing shareholder
226n; regulation of, 226, 237; value,” 309; expectations for,
return on, 241, 246, 247, 248, 22–34, 25n, 27, 219; functions of,
249, 250, 252, 253, 254, 255; and 497–98; Graham’s comments
risk, 232, 233, 237, 246, 247, 251, about, 487–96; inflation and,
252; selection of, 255, 360–61, 47–57; as intelligent owners,
376–78; sheepish behavior in, 499, 501–2; interests of, 499,
247; taxes on, 227, 241, 250, 251, 508n, 510; investment contract
254; time to sell, 254, 256; of, 219, 225, 529; ironical
turnover of stock in, 247; situation of, 364n; managers as,
types/classification of, 226, 228; 250, 252; and
Zweig’s comments about, managers/management,
242–56. See also closed-end 487–96, 497–511, 498n, 502–6;
funds; mutual funds meaning of term, 18–22;
“Investment Owner’s Contract,” measuring success of, 217–20;
219, 225 as mixed aggressive and
investment policy statement, defensive, 176, 178; and other
278 people’s mistakes, 203, 221, 223;
investment trusts, 226n personal situation of, 119–21;
predicting behavior of, 24n, 223;

608 Index

investors (cont.) junior stock issues. See common
primary cause of failure by, stock
217n; and proxy materials,
499n, 500–502, 501n; psychology junk bonds, 96, 96n, 108–9, 145–47,
of, 8, 51, 103, 119, 196, 272–73; 145n, 173n, 251, 420n, 429n,
“reckless,” 19; relationship with 488n
company of, 162, 162n, 203; self-
defeating behavior of, 12, 15; Juno Online Services, 40, 40n
self-knowledge of, 102; sheep “just do what works,” 42–44
behavior of, 498; speculators
distinguished from, 1–2, 10, Kadlec, Charles, 80
18–34, 35–46, 205–6; theory vs. Kahneman, Daniel, 151, 221, 528
practice regarding, 497–98, Kaplan, G. E., 235–36
498n; as thinking of self, 215, Karp, Morris, 450n
217; types of, 6; and whose Kayos, Inc., 447n
money is it?, 502–6; Zweig’s Kayser-Roth Co., 393, 395
comments about, 497–511. See Keck family, 491n
also type of investor Kemper Funds, 81
Keogh accounts, 64
Investors Stock Fund, 230 KeyCorp, 373
IPOs. See initial public offerings Keynes, John Maynard, 133n
IRA accounts, 64, 111n Kierkegaard, Soren, 180
ITI Corp., 384 Kimberly-Clark, 373
King Resources Co., 234
J. B. Hunt Transportation, 216 Klingenstein, J. K., 525–26
J. P. Morgan Chase, 82 Knapp, Tom, 542
Jackson, Phil, 39 Kozlowksi, L. Dennis, 442n
Jacob (Ryan) Internet Fund, 236n Kutyna, Donald, 339
Jantzen Inc., 391, 392
“January effect,” 41–42, 46 Lamont, Owen, 139n
Janus Global Techology Fund, Landis, Kevin, 81, 126, 126n
Lasus, Jay, 369
243–45 lawsuits, 175, 175n
Japan, 61n, 187 Lee, Kate Leary, 180
JDS Uniphase Corp., 14, 323, 505, Leffler, Edward G., 242
Legg Mason Value Trust, 397, 399
527–28 Leggett & Platt, 373
Jeddo Highland Coal, 543 Lehman Corp., 241
Jefferson-Pilot, 373 Lessons for Investors (Graham), 571,
Jesus: Graham’s reference to, 498n
Jobs, Steve, 510 572
Johnny-One-Note Co., 304 letter stocks, 3, 3n, 227, 227n, 236
Johns Manville Corp., 175n, 289, 351, Leuthold Group, 337n
leverage, 294
353 leveraged buyouts, 32–33n, 429n
Johnson & Johnson, 183, 183n, 305, Levin, Gerald M., 442, 443
LexisNexis, 399
373 liabilities, 348, 355, 356, 369, 370,
Johnson Controls, 373
Jones, Charles, 128n 371, 385, 391n, 398. See also
Jordan, Michael, 83 specific company
Jos. A. Bank Clothiers, 216

Index 609

Lichtenberg, G. C., 497 different, 250, 252; and
life insurance, 89, 118, 361 dividends, 341n, 489–92;
Lilly (Eli), 373 efficiency of, 499, 503;functions
Linear Technology, 370 of, 508n; Graham’s comments
Ling-Temco-Vought Inc., 4n, 412, about, 487–96; and interests of
investors, 499, 508n, 510; of
417, 422, 425–29, 425–26n investment funds, 229–32,
Lipper, Inc., 248, 253 245–46, 246n, 247, 249, 250, 251,
liquidations, 32, 381 252, 254, 290n; investors’s
liquidity, 203, 312n relations with, 487–96, 497–511,
LJM Corp., 500–501 498n; and market fluctuations,
load funds, 227 206–7; migrating, 245–46;
Lockheed Martin, 216 misbehavior of, 14, 497; and
“long run”: how long is, 113n per-share earnings, 315–16, 322;
Long-Term Capital Management poor, 488; as promoters, 307;
and repurchase plans, 506–9;
L.P., 13 reputation of, 251; and security
Longleaf Partners, 250, 251, 399–400 analysis, 293, 302, 305–7, 309; as
Loomis, Carol, 181 shareholders, 250, 252; stock
Lorie, James H., 67n options for, 322, 507–8, 507n,
losses, 224, 273, 420, 421; “carrying 509, 509n, 510–11; and stock
selection for aggressive
forward,” 318n; cost of, 526; and investors, 379, 399–400, 401,
Graham’s definition of 402; wealth of, 341n; and whose
investment, 35, 35n; importance money is it?, 502–6
of avoiding, 12–13; and margin Manhattan Fund, Inc., 233–35
of safety, 516, 518, 525–28, 529, margin accounts, 21–22, 21n, 47n,
530; and per-share earnings, 193, 267
314, 316, 318n; “really margin of safety, 10, 296, 301, 349,
dreadful,” 15; and taxes, 561, 371, 399, 401, 512–31, 515n,
562. See also specific company 519n, 537, 547, 571, 574
low-multiplier stocks, 387–90, 400, Marsh, Paul, 113n
451, 515–16 Massachusetts Investment Trust, 230
Lowe’s Companies, 373 mathematics, 569–70
LSI Logic Corp., 370 Mattel Inc., 234, 303
LTV Corp., 426n Maxim Integrated Products, 370
Lubin, Melanie Senter, 275 Maxwell Motors Co., 293
Lucent Technologies Inc., 14, 303, May Department Stores, 373
438–40 McCormick Harvesting Machine
luck, 243, 396, 525, 533, 535n Co., 458n
Lynch, Peter, 15n, 125–26, 250 McDonald’s Corp., 373
McGraw Edison, 461–62, 461n, 470
“mad money” account, 21–22, 46 McGraw-Hill, Inc., 135, 373, 461–62,
Mairs & Power Growth Fund, 251 461n, 470, 471, 472
managers/management: Merck & Co., 373
Mergenthaler Linotype Enterprises,
compensation for, 306, 316n, 330
401, 501, 507–8, 509, 509n,
510–11; competence of, 293, 487,
499; and convertible issues and
warrants, 411; and daring to be

610 Index

mergers and acquisitions: and mortgages, 108–9, 110, 173, 360–61,
aggressive investors, 173, 174, 360n
381, 389n, 393, 393n, 401; and
case histories, 422, 424, 424n, Motorola, 81
426, 426n, 438, 440–43, 441n; Mr. Market parable, 204–5, 212–25,
and defensive investors, 374;
and dividends, 505, 505n; and 380n, 531
investments vs. speculation, 32, Mr. Tax of America, 433n, 434
33n; and per-share earnings, Mulford, Charles, 329
323; and security analysis, 303, Munger, Charles, 401, 544, 554–55
303n; serial, 474n; stock vs. cash municipal bonds, 24, 259, 520; and
in, 505n
aggressive investors, 134n, 155;
Merrill Lynch & Co., 266n, 405n, and defensive investors, 92, 95,
406n, 410n, 443 106, 106n, 108–9; fluctuations in
price of, 208, 210; and
Micron Technology, 326–27 investment funds, 251, 253
Microsoft, 115n, 116n, 150, 151, 162n, Murray, Nick, 278
mutual funds: and aggressive
185, 247, 505, 505n investors, 141n, 145, 145n, 147,
MicroStrategy, 368, 369 148, 158n, 159n, 187, 377, 377n,
Miller, Merton, 494n 379n; as almost perfect, 242; and
Miller, William, 397, 399 “buy what you know” picking,
Minkow, Barry, 433–34n 127; characteristics of, 242;
Minnie Pearl’s Chicken System Inc., closed-end funds vs. open-end,
238–41; closing of, 237–38n; and
463, 466 convertible issues and
Mobil Corp., 491n warrants, 420; and corporate
Modigliani, Franco, 494n bonds, 283n; decline in funds
Money Magazine, 45, 255, 368, invested in, 17; and defensive
investors, 28, 28n, 89, 96n, 105,
530 128, 128n, 129–30, 354n, 356n,
“money managers,” 235–36, 237, 360–61, 369; expenses/costs of,
128n, 219, 242, 376–77, 377n;
360n, 400, 501n “focused” portfolios of, 290n;
money-market funds, 107, 108–9 foreign stocks and bonds in,
“Moneyline” (CNN program), 81 148, 187; and formula trading,
monopolies, 304, 356, 401 44; and growth stocks, 158n,
Montaigne, Michel de, 272 159n, 161; and inflation, 64;
Monument Internet Fund, 15, introduction of, 242; for junk
bonds, 145n, 147; managers of,
15–16n, 243–45 290n; and market fluctuations,
Moody’s Investment Service, 95, 6–7n, 7, 218; and new offerings,
141n; performance of, 229–32,
260, 501n 242, 245n, 377, 377n; precious
Morey, Matthew, 252n metals, 56n; and public attitude
Morgan Fun-Shares, 253 about stocks, 20n; registration
Morgan Guaranty Bank, 235n of, 226, 226n; as “regulated
Morgan Stanley, 39, 115n, 371, investment company” (RIC),
227–28n; return on, 253, 290n;
374–75
Morgan, J. P., 54, 54n
Morningstar: ratings by, 252;

website for, 129n, 148n, 157n,
159n, 183, 186, 227n, 252n, 374n,
375, 397, 420n

Index 611

and secondary companies, 268–69. See also initial public
172n; and security analysis, offerings
290n; small-cap, 369; and New York Central Railroad, 424n
speculation, 5, 37; and “sure New York Edison Co., 567–68
things,” 15, 15–16n; taxes on, New York Institute of Finance, 473
227–28n, 242, 562–63; types of, New York Stock Exchange (NYSE):
226–27, 227n. See also advice from members of, 261,
investment funds; specific fund 264, 267, 270, 271; bankruptcy
Mutual Series Funds, 396 of firms registered with, 266;
and bargains, 186; closing bell
name brands, 392, 401 on, 35; comparison of four
NASDAQ, 38, 81, 149n, 152, 186, companies listed on, 330–38;
and comparison of securities, 1;
190n, 217n, 359, 406n, 414n and convertible issues and
National Biscuit Co., 393 warrants, 413n; costs of trading
National Cash Register, 234 stocks on, 149n; “customers’
National General Corp., 4n, 412, brokers” as registerd with, 264;
and dealings with brokerage
415, 463–66, 466n, 470, houses, 138, 139, 266, 267; and
472 dividends, 493, 493n, 494n; fees
National Investors Fund, 230 for stock listed on, 128n;
National Presto Industries, 168, highest-price stock on, 491n;
391, 393, 463–66, 466n, 470, and per-share earnings, 315;
514 and portfolio policy for
National Student Marketing Corp., aggressive investors, 186; and
234, 235n, 481n stock selection for aggressive
Navistar, 458n, 460n investors, 202, 377, 377n; and
Neff, John, 228n stock selection for defensive
Nelson, F. Barry, 419 investors, 356; and stock splits,
net asset value. See book value 493, 493n; turnover of stock on,
net current assets. See working 37, 266–67; and World War I, 10
capital New York Trap Rock Co., 543
neuroscience of investing, 220–23 Newman, Jerome, 532–33, 532–33n
New Community debentures, 95, 96, Newman, Paul, 447n
155 news, stockmarket, 221–23, 223n
New Haven Railroad, 286 Newton, Isaac, 13–14, 15
New Housing Authority, 96, 96n, Niagara-Mohawk Power Co., 357
155 “Nifty Fifty” stocks, 336–37n
new offerings, 172, 253n, 405; and Nissim, Doron, 506, 506n
advice, 268–69; and aggressive Nixon, Richard M., 50n
investors, 134, 139–44, 172, no-load funds, 227, 227n, 239
174–75, 176–77, 392; and case Nokia, 81
histories, 433–37; of common nonconvertible bonds, 98–99, 134
stock, 139n, 141–44, 269; and Norfolk & Western, 425
defensive investors, 176; and Norfolk Southern Railroad, 217n,
investments vs. speculation, 28; 362n, 425n
and market fluctuations, 193; Norsk Hydro, 250
and per-share earnings, 312n;
and role of investment bankers,

612 Index

Nortek, Inc., 483–84 P/E ratio. See price/earnings ratio
Nortel Networks, 184, 483–84 Pacific Gas & Electric Co., 357
Northern Pacific Railway, 168, Pacific Partners, Ltd., 556
PacTel, 327
207–8, 209 PaineWebber, 41, 83
Northwest Industries Inc., 317–18, Palm, Inc., 479–80
Panhandle Eastern Pipe Line Co.,
317n, 412
Norway bonds, 138 357
Novellus Systems, 370 Parker Pen Co., 391, 392
Nucor Corp., 373 Pascal, Blaise, 35, 392, 529–31
NVF Corp., 411, 422, 429–33, 429n, “Pascal’s wager,” 392n, 529–31
patents and trademarks, 374
433n, 576–77 PBHG Technology &
Nygren, William, 397, 399
Communications Fund, 243–45
Oakmark Fund, 251, 397, 399 Penn Central Railroad, 4n, 94, 286,
Odean, Terrance, 149, 150n, 151
oil companies, 291, 291n, 292 362, 384, 422, 423–25, 423n,
online message boards, 502 424n, 425n, 466n, 564–65
online trading, 38–39, 128, 272, 344, Pennsylvania Electric Co., 424
pension funds, 84, 194, 194n, 308,
345 316n, 327–28, 398, 429n, 501n,
open-end funds, 116, 237–38n, 545–46. See also specific company
Peoples Gas Co., 357
238–41. See also mutual funds PepsiCo Inc., 373, 477
OPM (Other People’s Money), 303, per-share earnings: and aggressive
investors, 398; and common
303–4n stock, 318, 320; and convertible
opportunities: recognizing, 532–34, issues and warrants, 316, 318,
411, 414, 416; and defensive
535n investors, 338, 348, 351; and
options, call, 421 dividends, 492; Graham’s
options, stock, 3, 3n, 306, 308, 316n, comments about, 310–21; and
margin of safety, 514n; and
322, 323, 398, 400, 421, 507–11, repurchase plans, 506–7, 508;
507n, 509n, 522n. See also Zweig’s comments, 322–29. See
warrants; specific company also specific company
Oracle Corp., 505, 508–9 performance: and advice, 275; and
Orbitex Emerging Technology Fund, aggressive investors, 172n,
16n, 244 376–78, 377n, 379n, 388; and
orders: execution of, 267–68 defensive investors, 348, 356;
O’Shaughnessy, James, 42–44, 44n, factors influencing, 85; and
45 Graham’s definition of
overvaluation, 5, 14, 81, 172, 246, investment, 35, 35n; of growth
261, 505; and aggressive stocks, 451–52n; and market
investors, 163, 172, 382; fluctuations, 203; and per-share
“gambler’s fallacy” about, earnings, 321; of secondary
458n; and repurchase plans, companies, 172n; and security
508n, 509. See also specific analysis, 291n, 292, 293n,
company
Owens-Illinois Glass Co., 289, 351,
353
owner earnings, 308, 398, 399
owners: intelligent, 499, 501–2

Index 613

299–301; of value stocks, development of, 155–78, 179–87;
451–52n; vogue of, 4. See also rebalancing of, 104–5, 180n, 197,
“beating the market/average”; 219; vodka-and-burrito, 148. See
specific company or type of also asset allocation; selection,
security stock
performance funds, 228, 228n, portfolio trackers, 117n, 397
232–37 Posner, Victor, 429n
Performance Systems Inc., 463 PPG Industries, 373
Perimeter (Stan) Investments, 545, “pre-emptive right,” 414
557 precious metals, 55, 55–56n
periodicals: as source of advice, predictions. See forecasting
257–58, 258n preferred stock: and aggressive
Perot, H. Ross, 266n investors, 98, 133, 134–37, 134n,
Petersburg Paradox, 570 139, 140, 142, 166, 173, 176–77,
Pfizer, Inc., 167n, 247, 373 381; and balanced funds, 241;
Philadelphia Electric Co., 357 and bargains, 166, 173; and
Philip Morris, 175n convertible issues and
Pickens, T. Boone, 488n warrants, 404, 405, 406, 406n,
Piecyk, Walter, 41 412, 415, 417; and defensive
Pier 1 Imports, 216 investors, 89, 98–99, 100, 108–9,
Pimco, 110 111, 121, 176, 365; dividends on,
Pinault-Printemps-Redoute Group, 98–99, 99n, 134n, 285n, 323, 404,
469n 516; and Graham’s business
Plato, 251 principles, 523; and inflation,
Plexus Group, 42, 149n 48; and investment funds, 241;
Polaroid, 234, 392 and margin of safety, 512, 513,
portfolio: for aggressive investors, 516, 520; and new offerings,
101, 133–44, 145–54, 155–78, 140, 142, 405; and per-share
179–87, 376–95; autopilot, earnings, 318, 323; price
128–29, 130–32, 223; basic fluctuations in, 210–11; price
characteristics of, 89; changes record of, 405, 406; ratings for,
to, 117; chaotic, 273; as 210; recommended “coverage”
combination of active and for, 284; and risk, 283–87; and
passive ways of investing, 102; security analysis, 281, 283–87,
and common stocks, 112–23, 293–94, 308; as senior stock
124–32; for defensive investors, issues, 285n; switches between
89–100, 101–11, 112–23, 124–32, common and, 411–13; yield on,
337–38, 347–66; Graham’s 573. See also specific company
concept of appropriate price: and advice, 261; and
individual, 18–34; inflation and, bankruptcy, 423n; Buffet’s
47–57; “laddered,” 106n; market comments about, 540–41;
fluctuations and, 195–97; calculation of true market, 416;
negative approach to and comparison of four listed
development of, 133–44, 145–54; companies, 330–38, 334n, 337n;
100– stock, 105; overview about, and convertible issues and
1–11; own corporation stock in, warrants, 405, 406, 415, 416;
126–27; positive approach to decline in common stock, 3; of

614 Index

price (cont.) price/earnings ratio: and advice,
delisted stocks, 385n; and 264n; and bargains, 168;
dividends, 490, 491, 494n; and calculation of, 159–60n, 374,
earnings, 115–16, 318n; and 374n; and convertible issues
expectations for investors, 24, and warrants, 416; definition of,
24n, 31, 32; “gambler’s fallacy” 70n; forward, 374; Graham’s
about, 458n; and history and criticisms of high, 476, 476n;
forecasting of stock market, 65, and growth stocks, 159; and
69, 70, 71, 73, 74, 77, 78, 81, 83, history and forecasting of stock
84, 84n, 85, 334; and inflation, market, 70, 71, 76, 78; and
61, 62; and investment funds, investments vs. speculation, 37;
238, 239, 241, 250; and investor- and margin of safety, 514n; and
management relations, 487, 488; market fluctuations, 193, 200,
and margin of safety, 513, 515n, 202; and per-share earnings,
516, 517–18, 521, 521n, 522, 321; and portfolio policy for
522n; and market fluctuations, aggressive investors, 159,
17, 23–24, 189–92, 207–12; and 159–60n, 168, 181, 182, 183; and
mispricing of stock, 212–13, portfolio policy for defensive
363n; and new offerings, 140, investors, 115, 116, 117n; and
142, 143–44; and portfolio security analysis, 291, 292, 295,
policy for aggressive investors, 296; and stock selection for
4, 133–44, 136n, 158, 159, 163, aggressive investors, 382–83,
165–69, 171, 172, 174–78, 181, 384, 385, 399; and stock
183; and portfolio policy for selection for defensive
defensive investors, 97, 111–16, investors, 338, 349, 350, 350n,
113–14n, 122, 124, 176; and 352–53, 354, 355, 359, 374, 375.
repurchase plans, 507, 507n, See also specific company
508n; and risk, 17, 122; and
security analysis, 302–9; and price-to-assets ratio, 349
speculation, 572; of stock price-to-book value ratio, 374–75
options, 306; and stock selection Priceline.com, 504–5
for aggressive investors, 378, primary stock issues, 123
382–83, 384, 386, 388, 389, 390, pro forma (“as if”) statements, 307,
391; and stock selection for
defensive investors, 338, 347, 316n, 322–23, 411, 424n, 431
348, 349, 350, 350n, 351, 354, Procter & Gamble, 289, 305, 351, 373
355, 356, 359, 363, 363n, 364, profitability, 333, 453n. See also
365, 374–75; and timing,
189–92; unpredictability of, 24, specific measure of profitability
24n; and value, 10, 32, 36, 39n, profitable reinvestment theory,
40, 122, 206, 521, 522, 541;
wholesale, 76, 77. See also 489–92, 490n, 492, 493, 494
appreciation; bargains; ProFunds Ultra OTC Fund, 243–45
fluctuations, market; inflation; ProQuest, 399
price/earnings ratio; specific prospectus, 252, 437
company Providence Bank, 384n
proxy materials, 499n, 500–502,
price-and-wage freeze, 50n
501n, 510–11
Public Service Commission, 568
Public Service Electric & Gas Co.,

357

Index 615

public utilities: and aggressive Raskob, John J., 1–2, 2n, 534
investors, 175, 383n, 389; and rating: of bonds, 95, 210, 211, 283n,
bonds, 286–87; debt of, 348; as
defensive investment, 354, 350n; of investment funds, 252,
356–60; and defensive investors, 252n
122, 348, 354, 354n, 356–60, rating agencies, 501n
356n, 362; dividends of, 493, Reagan, Ronald, 274
495–96; and inflation, 54; and real estate, 56, 63, 63n, 203, 360n,
investments vs. speculation, 27; 414, 415n, 521
and market fluctuations, 9, 200; Real Estate Investment Trust
regulation of, 286n; and security Company, 446–50, 470
analysis, 284, 285, 286–87, 300, Real Estate Investment Trusts
304; and selection of stock, 348, (REITs), 63, 63n, 360n
354, 354n, 356–60, 356n, 362, Realty Equities Corp. of New York,
383n, 389; and subscription 446–50, 447n, 450n, 470
rights, 495–96 rebalancing, 104–5, 180n, 197, 219
Red Hat, Inc., 484–85, 484n, 485n
Public Utility Holding Company Regions Financial, 373
Act (1935), 286n reinvestment, 172, 179n, 253n; and
defensive investors, 113, 113n,
Puma Technology, 38 128, 356n; and dividends,
Purex Co., 494 489–92, 490n, 492, 493, 494; and
Putnam Growth Fund, 230 margin of safety, 515, 516; and
portfolio for aggressive
QLogic Corp., 370 investors, 145n, 172, 179n
Quaker Oats, 303 REITs. See Real Estate Investment
Qualcomm Inc., 14, 41, 41n, 370 Trusts
quicken.com, 157n, 354n, 375 repurchase plans, 309, 316n, 506–9,
“quotational” value/loss, 20, 36 507n, 508n, 509n, 511
quotations, market, 198–99, 203, 204, research, 126, 128, 159n, 243, 246,
265n, 272, 363n, 367, 376–77,
205, 206, 221, 222, 223 379n
Qwest Communications, 323–24, research and development (R&D),
305, 316, 440
324n restructuring charges, 428, 428n
retail bonds, 284
radio companies, 82 retirement plans, 126–27, 273. See
railroads, 82, 361, 423; and also pension plans; specific plan
Retirement Systems of Alabama, 146
aggressive investors, 136, 173, return: and advice, 272, 275, 277;
173n, 174–75; bankruptcy of, 4, aggregate, 27; for aggressive
4n, 362, 384, 423n; and bargains, investors, 29–34, 89, 135, 174,
173, 173n; bonds of, 172, 173, 182, 377, 381, 393; average
173n, 174–75, 284, 285, 286, 287, annual, 25n, 34, 112n; average
423, 424, 512; and defensive expected, 83, 84; for defensive
investors, 100, 122, 359, 361–62, investors, 22–29, 25n, 89, 91, 92,
362n; and market fluctuations, 96, 111, 112n, 113, 113n, 121, 122,
4, 4n; and security analysis, 284, 176, 368; and Graham’s
285, 286, 287; and speculation,
570–71. See also specific railroad
Randell, Cort, 235n
Rapid American, 412

616 Index

return (cont.) short selling, 458n; and
business principles, 523; speculation, 571; and value, 122;
Graham’s comments about, what is, 525–26; Zweig’s
18–34; and Graham’s definition comments about, 535. See also
of investment, 35n; and history specific company or type of
and forecasting of stock market, security
67, 78, 80–87; and inflation, 50, Risk Management Association, 501n
54, 62; and investment vs. Ritter, Jay, 150
speculation, 18, 19–20n; Roche Pharmaceutical Co., 410n
measures of, 453n; and public Rockefeller family, 185
attitude about stocks, 19–20n; Rodriguez, Robert, 397, 400
on Raskob’s prescription, 2; and Rogers, Will, 368
risk, 89; and security analysis, Rohm & Haas, 373
290n; Zweig’s comments about, Rosen, Jan M., 224n
35–46. See also dividends; Ross, Robert M., 97 DEL
interest; performance; return on Roth, John, 184
invested capital (ROIC); yield; Rothschild, Nathan Mayer, 179
specific company or type of Rothschild family, 33, 33n
security roulette, 518–19, 519n
Rouse Corp., 234
return on invested capital (ROIC), Rowan Companies, 370
398, 399 Royce, Charles, 369, 400
Ruane, Bill, 543, 544, 545
revenue bonds, 94 Ruettgers, Michael, 342n
Riley, Pat, 101 “Rule of 72,” 115n, 298n
risk: and advice, 264n; and “rule of opposites,” 208, 208n

aggressive investors, 32, 133n, “safety of principle,” 18, 35, 45
134n, 136–37, 145, 146, 159n, safety tests: for bonds, 283–87
160, 163, 174–75, 377, 392–93; San Francisco Real Estate Investors,
Buffett’s comments about,
546–47; and defensive investors, 447n
89, 96n, 102–4, 106n, 107, 110, Sanford C. Bernstein & Co., 38n, 181
112, 114, 114n, 116, 121–22, 124, Santa Fe Industries, 384
125, 367; and factors that Santayana, George, 1
characterize good decisions, savings accounts, 24, 55, 75, 97
528–29; foolish, 12; and formula savings and loan associations,
trading, 44, 45; and Graham’s
business principles, 523; and 360–61, 360n
history and forecasting of stock savings banks, 89, 97
market, 80–81; and inflation, savings bonds, 24, 108–10, 211
47n, 55, 57; and investment vs. Saxon Industries, 234
speculation, 20–21, 21n; Saylor, Michael, 369
managing of, 12–13, 535, 535n; SBC Communications, 46, 84, 327
and margin of safety, 515, 516, Schilit, Howard, 329
521–22n, 522, 525–26, 528–29; Schloss, Walter J., 541–42, 543–44,
and market fluctuations, 188,
219; and price, 17, 122; and 545, 549–50
return/reward, 89, 546–47; and Schow, Howard, 400
security analysis, 283–87; and Schultz, Paul, 139n

Index 617

Schwab (Charles A.) Corp., 107 characteristics of, 282–83; and
Schweber, Mark, 64 comparison of four listed
Schwert, William, 42, 42n, 150 companies, 330–38, 339–46;
Scientific-Atlanta, 370 concept of, 280–301; for
Scudder, Stevens & Clark, 260 defensive investors, 294–95,
Sears Roebuck Co., 289, 319, 320, 347–66; and dividends, 302; and
financial strength, 302, 308–9;
351, 353 and forecasting, 281, 282n,
SEC. See Securities and Exchange 288–89, 291n, 293n, 298, 299;
and general long-term
Commission prospects, 302; and growth
secondary companies, 5, 123, stocks, 281, 282, 295–98; and
management, 302; and per-
170–73, 172n, 176–78, 196, 196n, share earnings, 310–21;
294, 383–84, 520 prediction/qualitative
securities: delivery and receipt of, approach to, 364, 364n, 365; and
267–68, 267–68n price, 302–9;
Securities & Exchange Commission protection/quantitative
(SEC): and advice, 274; and approach to, 364, 364n, 365; and
AOL-Time Warner case, 443; risk, 283–87; and speculation in
and defensive investor, 128; and common stocks, 572; techniques
GEICO, 533n; and hedge funds, for, 281, 282, 282n; and two-part
382n; and investment funds, appraisal process, 321; and
226, 226n, 227n, 228n, 236, 250; valuation, 281–82; Zweig’s
and IPOs, 437; and letter-stocks, comments about, 302–9, 339–46.
3n; and mutual funds, 116; and See also case histories; financial
new issues, 392; and NVF- analysts; per-share earnings;
Sharon Steel case, 429n; and selection, stock; type of security
per-share earnings, 324n, Security Analysis (Graham and
328–29n; and Realty Equities Dodd), 18, 35n, 283, 423, 484n,
case, 450n; regulation of 499n, 508n, 514n, 537, 548, 564
brokerage houses by, 266; security analyst. See financial
regulation of public utilities by, analysts
286n; and repurchase plans, selection, stock: and adoption of
508n; and security analysis, schemes by large numbers of
286–87, 286n; and stock people, 195n; and advice, 272;
selection for defensive for aggressive investors, 30–31,
investors, 369; and Tyco case, 376–95; and bargain issues,
441n; website for, 186, 250, 274, 390–93; and “best” stocks in
303, 306–7, 324n, 375, 399, 438n, DJIA, 363; and bridge player
510n analogy, 378–79; “buy what you
Securities Industry Association, 17, know,” 125–27, 126n; criteria
258n for, 337–38, 348–66, 385–86; for
Securities Investor Protection Corp. defensive investors, 337–38,
(SIPC), 268 347–75, 385n; do it yourself,
security analysis, 330–38; and 128–29; Graham-Newman
advice, 260; for aggressive methods for, 380–83; Graham’s
investors, 303n, 376–95; and
capital structure, 302, 308–9;
and capitalization, 288;

618 Index

selection, stock (cont.) Southern New England Telephone,
comments about, 349–50, 327
376–95; Graham’s criteria for,
369, 371, 374–75; “human Southwest Airlines, 368
factor” in, 365; for long- and Spalding United Kingdom, 315
short-term, 30, 31; and low- special charges, 311, 312–14, 315,
multiplier industrial stocks,
387–90; and market 316, 317, 319, 320, 416, 424. See
fluctuations, 200, 206; “pick the also specific company
winners,” 76; and practicing “Special Purpose Entities,”
selecting stocks, 396–97; 316–17n
prediction/qualitative special situations. See “workouts”
approach to, 364, 364n, 365; speculation: and advice, 260, 262–63,
protection/quantitative 268, 269, 563; and aggressive
approach to, 347–48, 364, 364n, investors, 141n, 143, 160, 165,
365; rules for common stock, 171, 175, 392; and bargains, 171;
114–15, 117; and secondary benefits of, 21n; and case
companies, 383–84; single histories, 433–37; and
criteria for, 387–90; and special convertible issues and
situations, 393–95; and stock- warrants, 406, 409; and
picking “systems,” 37; Zweig’s defensive investors, 89, 112, 115,
comments about, 367–75. See 116, 119, 128; and dividends,
also asset allocation; 489, 490; expectations from,
diversification; security analysis 24–34; Graham’s comments
about, 18–34, 563–64; and
Sequoia Fund, 254, 254n, 543, 553 history and forecasting of stock
shareholders. See Investors market, 74, 85, 87; and inflation,
Sharon Steel Co., 411, 429–33, 429n, 47; intelligent, 21; investing
distinguished from, 1–2, 10,
576–77 18–34, 35–46, 205–6, 519–20; and
sheepish behavior, 247, 498 investment funds, 5, 229, 232,
Shiller, Robert, 85–86 233, 237; and margin of safety,
shorting, 19, 30, 32, 32n, 381n, 519–20, 521, 522n; and market
fluctuations, 5, 188, 189, 190–91,
458n 193, 199; and new offerings,
Siebel Systems, 370 141n, 143, 392; and problems of
Siegel, Jeremy, 2n, 47n, 80, 82, 85n, brokerage houses, 267; and
Raskob’s prescription, 2; and
475 role of investment bankers, 268;
Siegel, Laurence, 60n and security analysis, 294;
Sigma-Aldrich, 373 Zweig’s comments about,
Sing, Jeanette, 478 35–46
size of enterprise, 337, 348, 349, 350, Spinoza, Baruch, 195
splits, stock, 309, 344, 491, 492–96,
369, 386, 388, 389, 390, 499 493n
Slovic, Paul, 529 Sprint Corp., 497, 509
Small Business Administration, stability, 178, 348, 349, 371, 386. See
also volatility
447 stagflation, 59
small-cap stocks, 252, 369
Smith, Adam, 541–42
South Sea Co., 13
Southern California Edison, 357

Index 619

stamps, rare, 56 Starbucks, 126
Standard & Poor’s: and advice, 260; state bonds, 24, 95, 259, 520
Staunton, Mike, 113n
and bargains, 169, 171; bond steel industry, 167, 379, 383
ratings by, 95, 423; and stock: alternatives to, 15; “delisting”
convertible issues and
warrants, 403, 406n, 408n, 419; of, 385n; direct purchase of,
and dividends, 294n; and 128–29; good and bad, 521n;
expectations for investors, 27n, mental value of, 474; and
28, 28n; and Graham’s disciples, portfolio for defensive
537–38, 543, 544, 546; and investors, 103, 104, 105; public
history and forecasting of stock attitude about, 19–20, 19–20n;
market, 65–72, 76, 77, 84, 85; turnover rate of, 37, 38, 247,
and inflation, 50; and 266–67; “watered,” 312n. See
investment funds, 231, 231n, also common stock; preferred
233, 235, 237, 239, 250, 254, 255; stock; specific stock or sector of
and investment vs. speculation, stock
37; listing of constituent stock/equity ratio, 285
companies in, 250, 333; and Stock Guide (Standard & Poor’s),
market fluctuations, 190n, 144, 169, 354, 383–87, 388,
192–94, 209, 212, 218; and May 389, 391, 403, 433, 463, 575–76,
1970 debacle, 463n; and mutual 578
funds, 230, 290n; and portfolio stock market: and “beating the
for aggressive investors, 158, pros,” 217–20, 217n; books
161, 169, 171; and portfolio for about, 80–81; in China, 437n;
defensive investors, 111, 112n, easy ways to make money in,
115n, 131, 131n, 132; and 195n; as going wrong, 202–3;
price/earnings ratio, 70n; price history and forecasting of, 1, 2,
record from, 406; as rating 10, 24n, 54, 54n, 65–79, 80–87;
agency, 501n; and “second-line 1972 level in, 72–79; structure
companies,” 196, 196n; and of, 573–74; total value of U.S.,
security analysis, 290n, 294n, 84. See also financial market
299; and stock selection for stockbrokers. See brokerage houses
aggressive investors, 202, 377, stockholders. See investors
379n, 383–87, 388, 389, 390, 397; Streisand, Barbra, 39, 39n, 126
and stock selection for Strong Corporate Bond Fund, 146
defensive investors, 350n, 354, Stryker Corp., 482–83
354n, 359, 360, 361, 362, 369, Studebaker-Worthington Corp.,
371, 374–75; and technology 412–13
companies, 578; website for, subscription rights, 495–96, 495n
129n, 196n, 250. See also Stock Sullivan, Erin, 245–46
Guide; specific company Sun Microsystems, 181, 182, 183, 375
Standard Oil, 185 Superior Oil, 490–91, 491n
Standard Oil of California, 168–69, Supervalu Inc., 373
289, 292, 350, 351, 353 “sure things,” 15–17, 371, 521–22n
Standard Oil of New Jersey, 289, 292, Swift & Co., 289, 351, 353, 354, 355
351, 353, 429 Sycamore Networks, Inc., 304
Stanley Works, 373 Sysco Corp., 473–75

620 Index

T. Rowe Price, 105, 107, 148n, 251, and security analysis, 291n, 299;
369 as “sure things,” 15. See also
specific company
takeovers, 429–33, 429n, 487–88, Teco Energy, 373
487–88n. See also specific telecommunications stocks, 81, 215,
company 291n, 369, 383n, 437n, 521–22n
Teleprompter Corp., 234
tangible-asset value. See book value television, financial, 258n
Target Corp., 373 Telex Corp., 234
taxes: and aggressive investors, 134, Tellabs Inc., 370
Temco Services, 40
149, 149n, 155, 180n, 398; on Tenneco, 458n
corporations, 99, 99n, 177; and Texaco, 187, 289, 292, 351, 353
defensive investors, 91–96, 96n, Texas Instruments, 116, 116n, 490
99, 99n, 100, 106, 106n, 108, 109, Third Avenue Funds, 369, 400
110, 129, 363n; on dividends, 99, 3Com, 479–80
294n, 493, 495–96, 496n, 507n, 3M Co., 305, 372, 568
561, 562; and expectations for Thurlow Growth Fund, 243–45
investors, 23–25, 27, 34; and TIAA-CREF, 110, 111n
history and forecasting of stock ticker symbols, 40, 40n
market, 75; important rules Ticketmaster Online, 40
concerning, 561–62; and Tillinghast, Joel, 400
inflation, 50, 54, 63–64; and Time Warner Inc, 442–43. See also
interest, 99n, 100, 561, 562; and AOL Time Warner
investor-management relations, timing, 156–57, 179–80, 179n, 189–92,
497; and losses, 561, 562; and 206
margin of safety, 520; and TIPS. See Treasury Inflation-
market fluctuations, 207–12, Protected Securities
219, 224, 224n; and per-share Tomlinson, Lucile, 118
earnings, 314, 316, 318, 318n, Torray (Robert) Fund, 251, 397, 400
324n; of regulated investment Toys “R” Us, Inc., 444, 445
companies, 561–62; and tracking stocks, 396–97
repurchase plans, 507, 509; and trade names. See brand names
security analysis, 284, 285, 294n, trades: costs of, 318n, 363n, 379n,
305; and stock options, 509, 385n; of delisted stocks, 385n;
509n. See also specific company size of, 247; volume of, 266–68
TCW, 245 trading: insider, 479n
“technical approaches,” 2–3 “trading in the market,” 30
technology stocks: and aggressive Trane Co., 316
investors, 30, 172n, 173n, 187, Transamerica Premier Equity Fund,
383n; and convertible issues 245
and warrants, 411n; and Treasury Inflation-Protected
defensive investors, 126n, 369; Securities (TIPS), 26n, 63–64,
and dividends, 490n; in 63n, 211n
investment funds, 243; and Tri-Continental Corp., 417
investments vs. speculation, 37; Tricon Global Restaurants, Inc., 477n
and investor-management trust companies, 29, 270, 360n
relations, 503, 507; and margin
of safety, 521–22n; and market
fluctuations, 215; and risk, 12;

Index 621

trust funds, 4, 47, 89, 231, 232, 235, U.S. treasury securities, 107,
258–59, 259n 108–9

Tversky, Amos, 151, 221 U.S. Utilities Sector Index Fund,
Tweedy Browne Partners, 397, 542, 356n

543–44, 551 USA Interactive, 307
two-part appraisal process, 299–301, USG Corp., 175n
UST Inc., 216, 368
321
Tyco International Ltd., 14, 303, VA Linux, 152–54
Value Line (investment service), 186,
410n, 426n, 440–42, 442n, 497
288, 341, 342, 343
Ulysses (mythological figure), value/valuation: and advice, 259,
535–36
261, 274; and aggressive
uncertainty, 535 investors, 32, 33, 137, 166, 167,
undervaluation, 261, 508n; and 177, 178, 380n, 391n; and
bargains, 166, 167, 177, 178;
aggressive investors, 13–14, 32, Buffet’s comments about,
34, 167, 170, 172–73, 175, 382, 540–41; business vs. stock-
400; and bargains, 167, 170, market, 198–207; and dealings
172–73; Buffet’s comments with brokerage houses, 267; and
about, 537; and margin of defensive investors, 22–23, 24,
safety, 517–18, 520 25, 26, 27, 120, 122, 125, 364;
underwriting, 268–70, 434–35, 518. dependability of, 318n, 321; and
See also specific company or “enhancing shareholder value,”
underwriter 309; financial analysts as
Union Carbide Co., 289, 351, 353 creating, 568; and history and
Union Pacific Railroad, 362n forecasting of stock market, 74,
Union Underwear, 317n 83, 87; importance of, 533;
unit investment trusts, 226n inflated, 267; and inflation, 54,
United Accum., 230 58; and investment funds, 238,
United Aircraft Co., 289, 351, 353 239, 241, 245; and investor-
“units,” 414n management relations, 498n;
Universal Marion Co., 393, 394, 395 and margin of safety, 520, 521,
University of Michigan, 19–20n 522; and per-share earnings,
unpopular large companies, 163–66, 318, 318n, 320; and price, 10, 32,
168, 183 36, 39n, 40, 122, 206, 521, 522,
Updegrave, Walter, 111n, 219 541; and problems of brokerage
U.S. Bancorp, 373 houses, 267; “quotational,” 20,
U.S. bonds (other than savings), 24, 36; and repurchase plans, 507;
94–95, 96, 119 and risk, 122; and security
U.S. savings bonds, 92, 93–94, 95, analysis, 281–82, 285, 288–90,
118, 119, 120, 121, 188, 210, 211, 294, 295–98, 300; and selection
241, 520 of stock, 364, 380n, 391n; and
U.S. Steel Corp., 289, 351, 353, 384 speculation, 569; and stock
U.S. Treasury, 110, 496 splits, 493n; and two-part
U.S. Treasury bonds, 63, 94, 106n, appraisal process, 299–301.
107, 108–9, 111, 112n, 147, 250, See also earnings; fluctuations,
419
U.S. Treasury certificates, 94–95

622 Index

value/valuation (cont.) Westinghouse Electric Co.,
market; overvaluation; 289
price/earnings ratio;
undervaluation; specific company Wheelabrator-Frye, 469n
or type of security Whiting Corp., 467–69, 469n,

Van Wagoner Funds, 243–45 470
Vanguard Group, 63, 64, 107, Whitman, Martin, 400
Wiesenberger Financial Services,
110, 132, 248, 249, 251, 369,
400, 420, 420n, 510 158, 230, 239, 241
Veres, Robert, 259n, 276n, Willcox & Gibbs, 467–69, 469n,
278
VF Corp., 373 470
video game, financial, 38–41 Williams, Jackie G., 433–34, 433n,
Vilar, Alberto, 16
Vinik, Jeffrey, 37 436
vodka-and-burrito portfolio, Williams Communications,
148
volatility, 245, 356n, 406n, 420n, 509, 304
509n. See also stability Wilshire indexes, 27–28n, 215, 216,
volume: trading, 312n
Volvo, 250 243–45
Winstar Communications, 81
Wal-Mart Stores, 185, 247, 373 wireless stocks, 172n
Walgreen Co., 373 Woolworth Company (F. W.), 289,
Walker, Rob, 323n
Wall Street: reform of, 437 351, 354, 355, 569
Wall Street Journal, 30, 81, 186, 310, working capital: and aggressive

317, 397 investors, 166, 169, 169n1, 170,
Walton, Sam, 185 186, 381, 382, 385, 387–93, 391n;
Warner-Lambert Co., 167n and defensive investors, 348,
warrants, 3, 3n, 134, 311, 316, 318, 356, 369, 370, 371; and
dividends, 492; and security
403, 403n, 406, 411, 412, 413–21, analysis, 281
413n, 414n, 522, 522n. See also “workouts,” 155, 156, 174–75,
specific company 393–95, 522
Wasatch, 251 WorldCom, 14, 127, 146–47,
Washington Mutual, 375 303, 304n, 423n, 426n, 429n,
Washington Post Co., 217, 401, 497
545–46, 547, 558 Worthington Steel, 368
Wasserstein Perella, 478 W. R. Grace, 175n
“watered” stock, 312n Wyeth, 455n
Watson, T. L., Sr., 566
Webvan, 505 Xerox Corp., 14, 199, 295, 297, 392,
Welles, C., 235–36 456
West Point Pepperell, 391,
392 Xilinx Inc, 370
Westinghouse Corp., 351,
353 Y2K bug, 342–43n
Yahoo! Inc., 213, 475–77, 476n
yield: and aggressive investors,

134, 135, 136–37, 138, 394;
and convertible issues and
warrants, 404, 404n, 411–12;
and defensive investors, 26,

Index 623

89, 91, 92, 93, 95, 96, 97, 98, performance; return; type of
107, 110, 113, 113–14n, 124, security
125, 350; fluctuations in, 193, Yum! Brands, Inc., 475–77,
207–12; and history and 477n
forecasting of stock market,
71, 77, 78; and inflation, 57; Zenith Radio, 335
and speculation, 573. See also Ziv, Amir, 506, 506n
dividends; interest; ZZZZ Best, 433–34n

About the Authors

BENJAMIN GRAHAM (1894-1976), the father of value investing,
has been an inspiration for many of today’s most successful
businesspeople. He is also the author of Securities Analysis and
The Interpretation of Financial Statements.

JASON ZWEIG is a senior writer at Money magazine, a guest
columnist at Time, and a trustee of the Museum of American
Financial History. Formerly a senior editor at Forbes, he has
written about investing since 1987.

Credits

Cover design by mucca design
Interior Designed by Nancy Singer Olaguera

Grateful acknowledgment is made for permission to reprint:

“The Superinvestors of Graham-and-Doddsville,” by Warren E.
Buffett, from the Fall 1984 issue of Hermes, Magazine of Columbia
Business School. Reprinted by permission of Hermes, Magazines of
Columbia Business School, copyright © 1984 The Trustees of Columbia
University and Warren E. Buffett.

“Benjamin Graham,” b y Warren E . Buffett, from the
November/December 1976 issue of Financial Analyst Journal.
Reprinted by permission of Financial Analysts Federation.

T HE INTELLIGENT INVESTOR—Revised Edition. Copyright © 1973 by
Benjamin Graham. New material: Copyright © 2003 by Jason Zweig. All
rights reserved under International and Pan-American Copyright
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