We should note that had we instead chosen market prices as our yardstick, Berkshire’s results would look better, showing a gain since the start of fiscal 1965 of 22% compounded annually. Surprisingly, this modest…
A more difficult decision for us was how to measure the progress of Berkshire versus the S&P. There are good arguments for simply using the change in our stock price. Over an extended period of time, in fact, that is…
Adam Smith:The Wealth of Nations, Book I, Chapter V, Paragraph 117
Adam Smith《The Wealth of Nations》· Book I, Chapter V · Investing
By the money price of goods, it is to be observed, I understand always the quantity of pure gold or silver for which they are sold, without any regard to the denomination of the coin. Six shillings and eight pence, for example, in the time of Edward I., I consider as the same money price with a pound sterling in the present times, because it contained, as nearly as we can judge, the same quantity of pure silver.
We should note that had we instead chosen market prices as our yardstick, Berkshire’s results would look better, showing a gain since the start of fiscal 1965 of 22% compounded annually. Surprisingly, this modest…
A more difficult decision for us was how to measure the progress of Berkshire versus the S&P. There are good arguments for simply using the change in our stock price. Over an extended period of time, in fact, that is…
21:00 Figures · Investing · Modern investor letters
Benjamin Graham:The Limits of Market Timing
Benjamin Graham《Security Analysis》· Introduction, The Factor of Timing · Investing · Decision · Cognition
It is our view that stock-market timing cannot be done, with general success, unless the time to buy is related to an attractive price level, as measured by analytical standards.
Market timing only works when tied to analytically attractive prices, not to market signals alone.
Context
Graham did not believe that forecasting major market swings could by itself produce reliable profits. Timing works only when the moment to buy is tied to an analytically attractive price level, not to charts or market mood. First judge price against value; then decide when to act.
Today's question
Is your timing based on the relationship between price and value—or on a guess about the market's next move?