Wednesday May 25, 2022

The investor must not allow him to be disturbed by the collapse of the market

The average of market prices is known as a soft management ability. The shareholder assesses whether or not his investment is based on how many dividends he receives and how long-term the average price of his share is.

The same criteria should logically be applied to the evaluation of the activities and effectiveness of the company’s management and the strength of their position in the ownership of the company. I know this to be true, but we must emphasize this sentence. There is no other acceptable method or approach for evaluating society on market principles. On the other hand, there is a management that claims that it is not entirely responsible for what happens to the thorn value of their action.

In the series of books from the book of the most important investment advisor of the 20th century, learn from the most dedicated “investment guru” how to avoid these mistakes as an investor, broker or investment advisor and how to implement long-term investment strategies.
Even with a degree in economics or finance, Benjamin Graham soon became not only a full-fledged investor and portfolio manager, but also a leading theorist. If a number of things that are written in finance, often after a few months and even weeks a little stupid, Graham’s principles published many decades ago seemed to be more likely to go a long way in the truth and truth
.

It is, of course, true that managers cannot be held responsible for the price of fluctuations, which – as we have argued – have nothing to do with the essence of a functioning company, and thus with its fundamental values. However, it is only the lack of vigilance and intelligence of the stock that will allow this immunity to spread to all thorn rates, including those that are not only temporary, but represent a permanent reduction in thorn prices at an unsatisfactory low level. Good management represents a good average market price, poor management means a poor market price.

Kolsn cen obligac

The investor should be aware that any security of the principal and the year may be unquestionable, the actual market value of the long-term bond may fluctuate widely in response to the development of annual rates.

Due to the inverse relationship of salary, low income represents a high price and vice versa. The decline in the value of Northern Pacific’s 3 percent bonds in 1940 posed particular doubts about the safety of the issue tax. It is remarkable that the price of this bond recovered and reached a record high in a few years, and then lost two-thirds of its value only because the number of year rates increased. In the last forty years, the prices of even the highest quality bonds have undergone very surprising fluctuations.

Note that bond prices do not fluctuate in the same (inverse) ratio as the swapped yields, or their fixed nominal (one hundred percent) maturity value leads to a reduction in the fluctuation margin. However, in the case of very long maturities, prices and inputs vary by the same amount. Since 1964, there have been record shifts on both sides and in the market for high-quality bonds. If we take into account, for example, “quality municipal bonds” (tax-exempt), we find that their yield doubled from 3.2% to 7% between January 1965 and June 1970. Their price index fell from 110.8 to 67.5.

In the mid-seventies, yields on high-quality long-term bonds were at an equal level, not at any time in the country’s two-hundred-year economic history. Twenty-five years ago, just before the long run of the market began, bond yields were at their lowest level in history; long-term bonds of municipalities pinely only 1%, corporate bonds 2.4%, as a “normal” were considered deposits around 4.5 and 5%.

Those of us who have a long experience with the functioning of Wall Street have seen it many times how perfectly it works in the stock market Newton’s concept of action and reaction, of the same and opposite forces – when the most striking case was the DJI index from 64 points in 1921 to 381 in 1929, only was a subsequent record drop to 41 points in 1932. However, in this case, the movement of the large pendulum affected the relatively settled and stable price range and the introduction of high-quality bonds. Lesson: It is never possible to assume that things that are important in the financial markets will be completely accurate as they have happened in the past. This represents the first half of the popular rhyme: “I’m getting more, so it’s all.”

“The Smart Investor” is by far the best book ever written about investing. It is one of the thinnest publications of its kind, but so paradoxically perhaps most ignored in practice. Such is human nature. We just want to put everything together.

If it is not possible to make any meaningful predictions of price action, it is completely unrealizable in the case of bonds. In two times, the hunter could from time to time find a clue to the end of the bho or mediocre market by analyzing previous bond reactions, but similar guidance was completely lacking for future changes in annual bond rates or prices. This means that the investor must choose between long-term and short-term bonds primarily on the basis of their own preferences.

If he wants to be sure that market prices will not fall, US savings bonds or bonds of Sri E or H will be the best choice for him. for a period of five years and ten months, in the case of Sri H and for a period of ten years, with a guaranteed redemption value of equal cost, or even better. However, if the investor wants 7.5%, which can now be obtained from long-term corporate bonds, or 5.3% from municipal tax-exempt bonds, he must prepare for the prices of these issues to fluctuate.

Banks and insurance companies have the advantage that they can value high-quality bonds of this type on the basis of the mathematical method of “amortized (depreciated) costs”, but do not take the value of thorns into account; it would not be out of place if a private approach was applied by a similar approach.

The price fluctuations of convertible bonds and preference shares are the result of three factors: (1) fluctuating prices of ordinary shares of the same company, (2) differences in the credit situation of the company and (3) movements in general annual rates. A large number of convertible bonds were issued by companies, their credit rating is known to be below the best. Some of them were severely affected by the financial crisis in 1970. As a result, convertible bonds as a whole were exposed to a threefold worrying effect in recent years, and fluctuations in their prices were unusually broad. In a typical case, an investor would deceive himself if he expected to find a convertible bond with a regular combination of security equal to the original bond and the ability to spend on the right price movement as in the case of ordinary shares.

In this city, it would be worthwhile to make a note about the “long-term bonds of the future”. Why could the effects of changes in the years of interest not be divided between creditors and debt in some practical and even way? One option would be to sell long-term bonds with annual payments, they would change according to the corresponding index of current year rates. The main result of such an arrangement would be: (1) the nominal value of the bond would be below about 100 (percent of the actual nominal value) if the company hit its credit rating, but the year received would change, say at the rate offered by new conventional issues. bond; (2) Companies (issuing entities) should be able to take advantage of long-term debt – the problem and the cost of re-financing would be charged – but its cost would change from year to year.

Over the last ten years, the investor in the bond must have a dilemma, it is important: should he choose between full stability of the value of the principal, but with a lot and usually a short short-term yield? Or should he choose a fixed annual deposit, but accept a significant fluctuation (and seems to be heading downwards) of the value of the bond?

For most investors, it would be best if they could choose a compromise between these two extremes and be sure that over the course of twenty years, there will be no decline in the yield or value of bonds below a certain level. This could be ensured without vtch obt with the help of the bond of the new form that we are proposing. An important note: the government of the United States did a substantially similar thing, combining the original savings bond with the possibility of extending it for many years. The proposal we present here would cover part of the investment horizon and not bond bonds and would mean bringing much flexibility to the annual rate agreements.

This is not worth talking about non-transferable preference shares, or their special tax status of them owed (ie from those safe) a very given asset among institutional investors – for example, linking companies – much more than among individual investors.

The purpose of this revised edition of The Smart Investor is to apply Graham’s ideas to the conditions of the current financial market and still leave its original text intact (with the exception of notes under the explanatory note). Each Graham chapter is followed by a commentary. In these original shadows after the original text, there are also current examples, on which it is best to observe how current and how liberating remain Graham’s principles even today.

from the book: The Intelligent Investor

1. dl: Even a cautious investor will make time for it
2. dl: Speculation spe enrich someone else not vs
Length 3: Opposite investment tricks mean death
4. dl: You have to take speculation in the same way as casino games
5. dl: The investor and the speculator must pay attention to the forecasts of market development
6. dl: Mazan investor buys on the intermediate market and sells on bm
7. dl: A wise investor does not know that daily fluctuations do God
Length 8: A fearless investor can make up for stock market mistakes

ADVERTISING

ryvek is from the book
“Intelligent investor”

vydan nakladatelstvm City Publishing,
For more information, visit
www.grada.cz


The purpose of this revised edition of The Smart Investor is to apply Graham’s ideas to the conditions of the current financial market and still leave its original text intact (with the exception of notes under the explanatory note). Each Graham chapter is followed by a commentary. In these original shadows after the original text, there are also current examples, on which it is best to observe how current and how liberating remain Graham’s principles even today.

from the book: The Intelligent Investor

1. dl: Even a cautious investor will make time for it
2. dl: Speculation spe enrich someone else not vs
Length 3: Opposite investment tricks mean death
4. dl: You have to take speculation in the same way as casino games
5. dl: The investor and the speculator must pay attention to the forecasts of market development
6. dl: Mazan investor buys on the intermediate market and sells on bm
7. dl: A wise investor does not know that daily fluctuations do God
Length 8: A fearless investor can make up for stock market mistakes

ADVERTISING

ryvek is from the book
“Intelligent investor”

vydan nakladatelstvm City Publishing,
For more information, visit
www.grada.cz


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