Quote for the Week
In 1915, while just a beginner on Wall Street, I suggested that the firm recommend a low-price stock, the Computing-Tabulating-Recording Co. But my employer, a conservative fellow, pointed out that the company’s bonds weren’t covered by its assets. He said, ‘How can you touch such a speculative stock?’ And I returned to my desk a very chastised young man. Years later the public company changed its name to IBM.
He was wrong about the stock. But he was right in terms of an overall investment policy. Look at what could happen. A man could buy a stock like that at, say, $40 a share, and it goes to $100. Then people would say, ‘Don’t be a fool. Take the profit. Trees don’t grow to heaven, etc., etc.’ So he sells out, and then spends the rest of his life watching IBM go up and up, while looking vainly for another IBM. To make a fortune in one stock you almost have to be an insider. For mere traders, there are very, very few IBMs. That’s the vital point. — Benjamin Graham (source)