The Intelligent Investor: The Definitive Book On Value part 9. The purpose of this book is to supply, in a form suitable for laymen, guidance in the adoption and execution of an investment policy. Comparatively little will be said here about the technique of analyzing securities; attention will be paid chiefly to investment principles and investors’ attitudes. We shall, however, provide a number of condensed comparisons of specific securities - chiefly in pairs appearing side by side in the New York Stock Exchange list in order to bring home in concrete fashion the important elements involved in specific choices of common stocks | TABLE 3-1 Major Stock-Market Swings Between 1871 and 1971 Cowles-Standard 500 Composite Dow-Jones Industrial Average Year High Low Decline High Low Decline 1871 1881 1885 28 1887 1893 31 1897 1899 1900 31 1901 1903 26 45 1906 103 1907 38 53 48 1909 1914 29 47 1916-18 1917 33 33 1919 1921 32 47 1929 381 1932 86 89 1937 1938 55 99 50 1939 158 1942 44 41 1946 1949 30 24 1952 292 1952-53 15 256 13 1956 521 1957 24 420 20 1961 735 1962 29 536 27 1966-68 995 1970 36 631 37 early 1972 100 900 A Century of Stock-Market History 67 known Standard Poor s composite index of 500 stocks. The second is the even more celebrated Dow Jones Industrial Average the DJIA or the Dow which dates back to 1897 it contains 30 companies of which one is American Telephone Telegraph and the other 29 are large industrial Chart I presented by courtesy of Standard Poor s depicts the market fluctuations of its 425-industrial-stock index from 1900 through 1970. A corresponding chart available for the DJIA will look very much the same. The reader will note three quite distinct patterns each covering about a third of the 70 years. The first runs from 1900 to 1924 and shows for the most part a series of rather similar market cycles lasting from three to five years. The annual advance in this period averaged just about 3 . We move on to the New Era bull market culminating in 1929 with its terrible aftermath of collapse followed by quite irregular fluctuations until 1949. Comparing the average level of 1949 with that of 1924 we find the annual rate of advance to be a mere 1 hence the close of our second period found the public with no enthusiasm at all for common stocks. By the rule of opposites the time was ripe for the beginning of the .
