The Intelligent Investor: The Definitive Book On Value part 51. 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 | 486 Commentary on Chapter 18 What have we learned The market scoffs at Graham s principles in the short run but they are always revalidated in the end. If you buy a stock purely because its price has been going up-instead of asking whether the underlying company s value is increasing-then sooner or later you will be extremely sorry. That s not a likelihood. It is a certainty. CHAPTER 19 Shareholders and Managements Dividend Policy Ever since 1934 we have argued in our writings for a more intelligent and energetic attitude by shareholders toward their managements. We have asked them to take a generous attitude toward those who are demonstrably doing a good job. We have asked them also to demand clear and satisfying explanations when the results appear to be worse than they should be and to support movements to improve or remove clearly unproductive managements. Shareholders are justified in raising questions as to the competence of the management when the results 1 are unsatisfactory in themselves 2 are poorer than those obtained by other companies that appear similarly situated and 3 have resulted in an unsatisfactory market price of long duration. In the last 36 years practically nothing has actually been accomplished through intelligent action by the great body of shareholders. A sensible crusader if there are any such would take this as a sign that he has been wasting his time and that he had better give up the fight. As it happens our cause has not been lost it has been rescued by an extraneous development known as takeovers or take-over bids. We said in Chapter 8 that poor manage Ironically takeovers began drying up shortly after Graham s last revised edition appeared and the 1970s and early 1980s marked the absolute low point of modern American industrial efficiency. Cars were lemons televisions and radios were constantly on the fritz and the managers of many publicly-traded companies ignored both the present interests of their outside shareholders and the .
