The Intelligent Investor: The Definitive Book On Value part 37. 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 | 346 Commentary on Chapter 13 Meanwhile as if the bear market did not even exist Expeditors International s shares went on to gain in 2000 in 2001 and another in 2002-finishing that year nearly 51 higher than their price at the end of 1999. Exodus s stock lost 55 in 2000 and in 2001. On September 26 2001 Exodus filed for Chapter 11 bankruptcy protection. Most of the company s assets were bought by Cable Wireless the British telecommunications giant. Instead of delivering its shareholders to the promised land Exodus left them exiled in the wilderness. As of early 2003 the last trade in Exodus s stock was at one penny a share. CHAPTER 14 Stock Selection for the Defensive Investor It is time to turn to some broader applications of the techniques of security analysis. Since we have already described in general terms the investment policies recommended for our two categories of investors it would be logical for us now to indicate how security analysis comes into play in order to implement these policies. The defensive investor who follows our suggestions will purchase only high-grade bonds plus a diversified list of leading common stocks. He is to make sure that the price at which he bought the latter is not unduly high as judged by applicable standards. In setting up this diversified list he has a choice of two approaches the DJIA-type of portfolio and the quantitatively-tested portfolio. In the first he acquires a true cross-section sample of the leading issues which will include both some favored growth companies whose shares sell at especially high multipliers and also less popular and less expensive enterprises. This could be done most simply perhaps by buying the same amounts of all thirty of the issues in the Dow-Jones Industrial Average DJIA . Ten shares of each at the 900 level for the average would cost an aggregate of about 16 000 On the basis of the past record he might expect approximately the same future results by buying shares of .
