Intelligent Investor Appendices Flashcards
2 Variables that graham investors focus on
Price and value
3 subjects of no interest to Graham and Dodd investors
1 beta
2 capital asset pricing model
3 covariance in returns among securities
In value investing, the greater potential for reward…
The less risk
Ex. Safer to by $1 at $.40 than at $.60
Why should you generally avoid making large investments in mutual funds at the end of the year
This is when capital gains distributions are paid, therefor you
Will incur tax for a gain earned by the fund before you even own it
Speculative growth valuations on excellent companies: If the earnings multiplier tends to increase with profitability and the rate of return on book value increases this causes…
The value to tend to increase directly as the square of earnings,
But inversely to book value
Therefore tangible assets have a drag on average market value
Favorable future prospects are something shrewd investors…
Look for, but don’t pay for
