Warren Buffett might disagree....
Graham and Dodd
From Security Analysis, 1940 edition:
“These
intricacies of corporate accounting and financial policies undoubtedly
provide a broad field for the activities of the securities analyst.
There are unbounded opportunities for shrewd detective work,
for critical comparisons, for discovering and pointing out a state of
affairs quite different from that indicated by the publicized
“per-share earnings.” That this work may be of exceeding value cannot
be denied. In a number of cases it will lead to a convincing conclusion
that the market price is far out of line with intrinsic or comparative
worth and hence to profitable action based upon this sound foundation.
But it is necessary to caution the analyst against overconfidence in
the practical utility of his findings. It is always good to know the
truth, but it may not always be wise to act upon it, particularly in
Wall Street. And it must always be remembered that the truth that the
analyst uncovers is first of all not the whole truth and, secondly, not the immutable truth. The result of his study is only a more nearly correct version of the past.
His information may have lost its relevance by the time he acquires
it, or in any event by the time the market place is finally ready to
respond to it.”
No comments:
Post a Comment