Energetic Attitude, an Unsatisfactory Market Price

Source: www.morningstar.comWhat have we learned? The market scoffs at Graham’s principles in the short run, but they are always revalidated in the end. If you buy a stock purely because its price has been going up-instead of asking whether the underlying company’s value is increasing-then sooner or later you will be extremely sorry. That’s not a likelihood. It is a certainty.

486 Commentary on Chapter 18CHAPTER Shareholders and Managements:

Dividend Policy

Ever since 1934 we have argued in our writings for a more intelligent and energetic attitude by shareholders toward their managements. We have asked them to take a generous attitude toward those who are demonstrably doing a good job. We have asked them also to demand clear and satisfying explanations when the results appear to be worse than they should be, and to support movements to improve or remove clearly unproductive managements. Shareholders are justified in raising questions as to the competence of the management when the results (1) are unsatisfactory in themselves, (2) are poorer than those obtained by other companies that appear similarly situated, and (3) have resulted in an unsatisfactory market price of long duration.