# data[].attributes.body
Research reports have shown that companies that pay out higher dividends actually have higher future corporate earnings

The amount that companies are giving out in dividends has greatly decreased from the publication of the book to the modern day

# data[].attributes.body
“We suggest that the margin-of-safety concept may be used to advantage as the touchstone to distinguish an investment operation from a speculative one”

# data[].attributes.body
First Principle: “Know what you are doing- know you business”

Second Principle: “Do not let anyone else run your business, unless you can supervise his performance with adequate care and comprehension or you have unusually strong reasons for placing implicit confidence in his integrity and ability”

Third Principle: “Do not enter upon an operation unless a reliable calculation shows that it has a fair chance to yield a reasonable profit”

Fourth Principle: “Have the courage of your knowledge and experience”

“Ultimately, financial risk resides not in what kinds of investments you have, but in what kind of investor you are”

# data[].attributes.body
“It will be difficult to impose worthwhile changes in the field of new offerings, because the abuses are so largely the result of the public’s own heedlessness and greed”

# data[].attributes.body
"Although there are good and bad companies, there is no such thing as a good stock; there are only good stock prices, which come and go”

# data[].attributes.body
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 likelihood. It’s a certainty

# data[].attributes.body
“Extremely few companies have been able to show a high rate of uninterrupted growth for long periods of time. Remarkably few, also, of the larger companies suffer ultimate extinction”

# data[].attributes.body
In order to beat the market, one “must follow specific methods that are not generally accepted on Wall Street, since those that are so accepted do not seem to produce the results everyone would like to achieve”

A factor that may be taken into account is the S&P Ranking attached to the company

# data[].attributes.body
Convertible issues are claimed to be especially advantageous to both the investor and the issuing corporation”

# data[].attributes.body
You can buy a convertible fund, but there is no real need for the Intelligent Investor to do this

# data[].attributes.body
"The seven statistical requirements for inclusion in the defensive investor’s portfolio are (1) adequate size, (2) sufficiently strong financial condition, (3) continued dividend for at least the past 20 years, (4) no earnings deficit in the past ten years, (5) Ten-year growth of at least one-third in per-share earnings, (6) price of stock no more than 1.5X net asset value, and (7) price no more than 15X average earnings of the past 3 years"

# data[].attributes.body
many companies trade at valuations that are not justified, even when outstanding growth and performance are present

# data[].attributes.body
“Investing on the basis of projection is a fool’s errand; Investing on the basis of protection is the best solution”

# data[].attributes.body
The Intelligent Investor must make sure that the company first passes the quantitative threshold (good value and solid growth prospects) and then worry about the qualitative measures (future prospects and management effectiveness)

# data[].attributes.body
“The chief criterion used for corporate bonds is the number of times that total interest charges have been covered by available earnings for some years in the past”

# data[].attributes.body
Factors that can affect the valuation of stocks include the general long-term prospects, management, financial strength and capital structure, dividend record, and current dividend

Look for companies with large competitive advantages, companies that consistently grow earnings at a steady pace (10% pre-tax long-term), and that spend on R&D

# data[].attributes.body
“Corporate accounting is often tricky, security analysis can be complicated; stock valuations are really dependable only in exceptional cases”

# data[].attributes.body
Companies with higher short-term growth rates can be looked at over a shorter three year horizon, instead of the longer 7 to 10 years for more stable growers

“The only thing you should do with pro forma earnings is ignore them”

Pro forma earnings - Pro-forma earnings are projected earnings based on a set of assumptions and often used to present a business plan (in Latin pro forma means "for the sake of form"). It also refers to earnings which exclude non-recurring items. Pro-forma earnings are not derived by standard GAAP methods.

Read more: Pro-Forma Earnings https://www.investopedia.com/terms/p/proformaearnings.asp#ixzz51SvqWff9
Follow us: Investopedia on Facebook

# data[].attributes.body
“An index fund… will beat most funds over the long run”

# data[].attributes.body
“Most of the companies operate under special provisions of the income-tax law, designed to relieve the shareholders from double taxation on their earnings”

If you’re not prepared to stick with a fund through at least three lean years, you shouldn’t buy it in the first place. Patience is the fund investor’s single most powerful ally”

# data[].attributes.body
“The Intelligent Investor will not do his buying and selling solely on the basis of recommendations received from a financial service”

# data[].attributes.body
Financial services companies provide analysis and outlooks for thousands of stocks; These analysis only reflect whether a company is worth buying or selling in the short-term

Pay attention to the advice of Investment Banks

# data[].attributes.body
“A great company is not a great investment if you pay too much for the stock”

“Growth stocks are worth buying when their prices are reasonable”

# data[].attributes.body
Buying relatively large companies that are currently unpopular is one way to make large returns

Enterprising investors must (1) must meet objective or rational tests of underlying soundness and (2) must follow strategies different from those followed by most investors or speculators in order to obtain better than average results

# data[].attributes.body
“At other times he [investor] will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies”

# data[].attributes.body
For the Intelligent Investor, falling stock prices are a great for the long-term

“But investing isn’t about beating others at their game. It’s about controlling yourself at your own game”

# data[].attributes.body
“Best of all, once you build a permanent autopilot portfolio with index funds as its heart and core, you’ll be able to answer every market question with the most powerful response a defensive investor could ever have: “I don’t know and I don’t care"

# data[].attributes.body
Stocks should be a major part of an investor’s portfolio because they offer better inflation protection than bonds and because the yields can be quite high at certain time periods
Never just “Buy what you know”, unless you have done your homework and understand why it is worth owning this company

# data[].attributes.body
“The main difference between investing in first- and second-grade bonds is usually found in the number of times the interest charges have been covered by earnings”

“The more you trade, the less you keep”

# data[].attributes.body
Avoid high-grade preferred stocks and inferior types of bonds, unless they can be purchased at least at a 30% discount to par value

Many funds today specialize in emerging markets; tend to be more volatile than domestic

“When you trade instead of invest, you turn long-term gains into ordinary income”

# data[].attributes.body
There are two approaches to investing, “active and enterprising” and “passive and defensive”

US Savings bonds E and H series are very safe investments, back by the government; E series bonds accumulate interest on the principle, while H series bonds are sold at discount to face value; Can be cashed in at any time upon borrower’ request

Bond funds are great way to get bond exposure with keeping a diversified approach

# data[].attributes.body
“Instead of buying and holding their stocks, many people end up buying high, selling low, and holding nothing but their own head in their hands

# data[].attributes.body
“Since the profits that a company can earn are finite, the price that investors should be willing to pay for stocks must also be finite”

“In the long run, you can reasonably expect stocks to average roughly a 6% return (or 4% after inflation)”

# data[].attributes.body
“The stock market’s performance depends on three factors: real growth (the rise companies’ earnings and dividends), inflationary growth (the general rise of prices throughout the economy), and speculative growth-or decline (any increase or decrease in the investing public’s appetite for stocks)”

# data[].attributes.body
"An investment operation is one which , upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative"

# data[].attributes.body
1. You must thoroughly analyze a company and the soundness of its underlying business. (thorough analysis: the study of facts in light of established standards of safety and value)

2. You must deliberately protect yourself against serious losses

3. You must aspire to “adequate”, not extraordinary performance

# data[].attributes.body
"...the possibility of large-scale inflation remains, and the investor must carry some insurance against it. There is no certainty that a stock component will insure adequately against such inflation, but it should carry more protection than the bond component"

# data[].attributes.body
“There is no close time connection between inflationary (or deflationary) conditions and the movement of common-stock earnings and prices”

“It’s so important to measure your investing success not just by what you make, but by how much you keep after inflation”

“There is no certainty that a stock component will insure adequately against such inflation, but it should carry more protection than the bond component”

The stock market tends to underperform when inflation is high (>6%) or massive deflation is occurring (contraction of prices)