Common Stocks as Long Term Investments

Stocks, on the other hand, were viewed as risky speculations, due to the market's volatility. Smith himself held that view, before beginning the research for this book.

Author: Edgar Lawrence Smith

Publisher: Mockingbird Press

ISBN: 9781684930951

Category: Business & Economics

Page: 0

View: 335

Common Stocks as Long Term Investments (1924) by Edgar Lawrence Smith proved for the first time that stocks outperformed bonds in long-term stock market investments. Before Smith's work, the prevailing wisdom regarding investing stated that bonds were a safer investment. Conservative investors would allocate a large portion of their investments to bonds, relying on the annual rate of interest as a sure bet. Stocks, on the other hand, were viewed as risky speculations, due to the market's volatility. Smith himself held that view, before beginning the research for this book. As he told his Harvard class at their 50th reunion, "I tried to write a pamphlet on why bonds were the best form of long term investment. But supporting evidence for this thesis could not be found." Edgar Lawrence Smith (b. 1882, d. 1971) was a Harvard-educated economist and investment manager. While working as an advisor to the brokerage firm Low, Dixon & Company, he began to look at the relative performance of bonds versus stocks. Through 11 case studies completed for Common Stocks as Long Term Investments, Smith proved that the prevailing wisdom in favor of bonds over stocks was wrong. In 10 out of the 11 cases, a $10,000 investment in arbitrarily chosen stocks would have outperformed an equal investment in high-grade bonds. And in the 11th case, the lower return was impacted by two market panics and inflation (in the years 1866-1885). How does Smith account for the better performance of stocks over time? To begin, stocks often grow with or even in excess of inflation. Returns on bonds, on the other hand, lose purchasing power over time due to inflation. In addition, the general march of progress through population growth and improved standards of living over time leads to greater demand for products and services. The trajectory of progress often leads to growth that outpaces inflation, making stocks a better long-term investment. Smith's work supports a long-term investment strategy. He shows that over 15 years, the value of stocks sees a loss only 1.1% of the time. While they may be subject to short-term fluctuations, their long-term reliability makes them a smart investment as part of a balanced portfolio. Smith does not advocate against bonds. He merely suggests that investors give heavier weight to stocks than bonds, rather than the other way around. Famous economists Irving Fisher and John Maynard Keynes praised the book. Keynes invited Smith to join the Royal Economic Society, and Fisher directly stated that he had more confidence in common stocks due to Smith's work. Unfortunately, Smith, Irving, Keynes, and the rest of the world were about to discover that while stocks were generally the best long-term investments, there could still be ruinous market fluctuations. The Wall Street Crash of 1929 was the ruin of many individuals and businesses. Keynes' fortune was nearly wiped out. Irving lost over $100M in today's dollars. And Smith himself had to sell his own mutual fund firm, Investment Managers Company. In the subsequent years, Smith focused instead on research and writing, rather than working directly in the financial industry. But the long-term reliability of common stocks still holds. Even accounting for large market downturns, a diversified investment portfolio weighted to common stocks is still the clear financial winner when we look at an investment strategy over decades. While Smith suffered from the Crash of '29 (along with the rest of the country, including great economists), his ideas have been backed up since he first published, by Alfred Cowles in 1939 and again by Rex Sinquefield in 1976.

Common Stocks as Long term Investments in the Nineteen sixties

Author: Alan J. Zakon



Category: Investments

Page: 890

View: 208

Common Stocks as Long Term Investmnets

Author: Edgar Lawrence Smith



Category: Bonds

Page: 152

View: 488

Common Stock Values and Yields 1950 61

Author: Wilford John Eiteman



Category: Stocks

Page: 52

View: 366

Common Stocks As Long Term Investments

CHAPTER XIII—SUPPLEMENTARY TESTS OF COMMON STOCKS REINVESTMENT OF SURPLUS INCOME Going back to our original tests of the relative long term investment value of twelve separate groups of stocks and of high grade bonds, we discover that ...

Author: Edgar Lawrence Smith

Publisher: Pickle Partners Publishing

ISBN: 1786256290

Category: Business & Economics

Page: 101

View: 358

Edgar Lawrence Smith, (1882-1971) was an economist, investment manager and author of the influential book “Common Stocks as Long Term Investments”, which promoted the then-surprising idea that stocks excel bonds in long-term yield. . He worked in banking and other financial endeavors in the years after college, then signed on in 1922 as an adviser to the brokerage firm Low, Dixon & Company. While there, he later recounted in his Harvard class’s 50th reunion yearbook, “I tried to write a pamphlet on why bonds were the best form of long term investment. But supporting evidence for this thesis could not be found.” This discovery led to the 1924 publication of “Common Stocks as Long Term Investments.” The book was widely reviewed and praised, and became a key intellectual support for the 1920s stock market boom. Its success enabled Smith to launch a mutual fund firm, “Investment Managers Company.” It also garnered him an invitation from the economist John Maynard Keynes, who had favorably reviewed the book in “The Nation”, to join the Royal Economic Society. The Wall Street Crash of 1929 brought a turn in Smith’s fortunes.—Print Ed.

Everyman and His Common Stocks

"The original 1931 ed."--Jacket. Originally published: 1st ed. New York : Whittlesey House, 1931.

Author: Laurence Henry Sloan

Publisher: McGraw-Hill

ISBN: 9780071357272

Category: Business & Economics

Page: 306

View: 847

In the darkest days of America's Great Depression, Laurence H. Sloan's Everyman and His Common Stocks arrived as a beacon of hope and sanity. Sloan's reassuring words -- calling for patience and attention to fundamentals remind readers that long-term stock investing is the surest route to low-risk wealth. This rare classic is a cautionary tale for all investors to take measured risks as they remain mindful of the realities of investing. Sloan's analysis of the Crash of 1929 provides timeless insights into the stock market -- and gives readers the clues they need to spot the next crisis. Everyman and His Common Stocks will be a treasured addition to the library of any investor.

Stocks for the Long Run

All Rights Reserved Praise for "Stocks for the Long Run: "One of the Top 10 business books of the year."--"Business Week "One of the 10 best investment books of all time...This is the buy-and-hold bible.

Author: Jeremy J. Siegel

Publisher: McGraw-Hill Companies


Category: Rate of return

Page: 328

View: 812

"Siegel's conclusion - that, when long-term purchasing power is considered, stocks are actually safer than bank deposits! - is now strengthened with updated research findings and information that include a thorough analysis of the "Dow 10" and other yield-based strategies that have captivated investors over the past several years; how the Baby Boom generation will change the stock market forever - knowledge that can energize your own portfolio's performance; the amazing effect of the calendar on stock market performance - and how investing at certain times of the year can enhance performance; how the newest tax laws impact your investment returns and the funding of your retirement account; analyses and performance comparisons of highly publicized market sectors such as small cap stocks, growth stocks, and the "Nifty Fifty" stocks; and how Wall Street pros use investor sentiment and Fed policy to successfully time stock purchases over the investment cycle."--BOOK JACKET.Title Summary field provided by Blackwell North America, Inc. All Rights Reserved

Common Stocks for Investors and Traders

Author: James Clarence Coe



Category: Investments

Page: 296

View: 281

Philip A Fisher Collected Works Foreword by Ken Fisher

" Common Stocks and Uncommon Profits was the first investing book to reach the New York Times bestseller list.

Author: Philip A. Fisher

Publisher: John Wiley & Sons

ISBN: 1118388143

Category: Business & Economics

Page: 752

View: 730

A classic collection of titles from one of the most influentialinvestors of all time: Philip A. Fisher Regarded as one of the pioneers of modern investment theory,Philip A. Fisher's investment principles are studied and used bycontemporary finance professionals including Warren Buffett. Fisherwas the first to consider a stock's worth in terms of potentialgrowth instead of just price trends and absolute value. Hisprinciples espouse identifying long-term growth stocks and theiremerging value as opposed to choosing short-term trades for initialprofit. Now, for the first time ever, Philip Fisher InvestmentClassics brings together four classic titles, written by the manwho is know as the "Father of Growth Investing." Common Stocks and Uncommon Profits was the firstinvesting book to reach the New York Times bestseller list.Outlining a 15-step process for identifying profitable stocks, itis one of the most influential investing books of all time Paths to Wealth Through Common Stocks, expands theinnovative ideas in Fisher's highly regarded Common Stocks andUncommon Profits, and explores how profits have been, and willcontinue to be made, through common stock ownership—assertingwhy this method can increase profits and reduce risk Also included is Conservative Investors Sleep Well andDeveloping an Investment Philosophy Designed with the serious investor in mind, Philip FisherInvestment Classics puts the insights of one of the greatestinvestment minds of our time at your fingertips.

How to Invest in Common Stocks with the Aid of the Value Line Investment Survey

Author: Arnold Bernhard



Category: Investments

Page: 72

View: 240