The Intelligent Investor: The Definitive Book On Value part 20. 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 | 176 The Intelligent Investor middle ground or a series of gradations between the passive and aggressive status. Many perhaps most investors seek to place themselves in such an intermediate category in our opinion that is a compromise that is more likely to produce disappointment than achievement. As an investor you cannot soundly become half a businessman expecting thereby to achieve half the normal rate of business profits on your funds. It follows from this reasoning that the majority of security owners should elect the defensive classification. They do not have the time or the determination or the mental equipment to embark upon investing as a quasi-business. They should therefore be satisfied with the excellent return now obtainable from a defensive portfolio and with even less and they should stoutly resist the recurrent temptation to increase this return by deviating into other paths. The enterprising investor may properly embark upon any security operation for which his training and judgment are adequate and which appears sufficiently promising when measured by established business standards. In our recommendations and caveats for this group of investors we have attempted to apply such business standards. In those for the defensive investor we have been guided largely by the three requirements of underlying safety simplicity of choice and promise of satisfactory results in terms of psychology as well as arithmetic. The use of these criteria has led us to exclude from the field of recommended investment a number of security classes that are normally regarded as suitable for various kinds of investors. These prohibitions were listed in our first chapter on p. 30. Let us consider a little more fully than before what is implied in these exclusions. We have advised against the purchase at full prices of three important categories of securities 1 foreign bonds 2 ordinary preferred stocks and 3 secondary common stocks including of course original offerings of such
