Historical Thought for the Day
January 18, 2010
Thought for the day: It has been an old and sound principle that those who cannot afford to take risks should be content with a relatively low return on their invested funds. From this there has developed the general notion that the rate of return which the investor should aim for is more or less proportionate to the degree of risk he is ready to run. Our view is different. The rate of return sought should be dependent, rather, on the amount of intelligent effort the investor is willing and able to bear on his task. --Benjamin Graham, The Intelligent Investor This day in financial history: 1956: After more than a half-century as a private company, the Ford Motor Co. goes public when the Ford Foundation sells 10.2 million shares at $64.50. The largest IPO then on record, the offering puts 22% of Henry Ford's company into public hands. Source: Peter Wyckoff, Wall Street and the Stock Markets. 2000: It's impossible to pay too much for a good stock, a leading investor tells The Wall Street Journal with a straight face. " 'It's a new world order,' says Robert Froelich, vice chairman and chief investment strategist at Kemper Funds. He says investors should own Cisco Systems, Motorola and Intel at any price and not worry about the valuation. 'We see people discard all the right companies with all the right people with the right vision because their stock price is too high -- that's the worst mistake an investor can make. The people who have missed the bull market are the people who are on the sidelines trying to figure out how to value these things as opposed to getting into the market.' " They're also the people who miss the destruction of overvalued stocks that begins just weeks after Froelich's remarks. Source: The Wall Street Journal, January 18, 2000, p. C1. Source: Jason Zweig
