have a close relationship with the particular company—through
employment, family connection, etc.—which justifies them in plac-
ing a large part of their resources in one medium and holding on
to this commitment through all vicissitudes, despite numerous
temptations to sell out at apparently high prices along the way.
An investor without such close personal contact will constantly
be faced with the question of whether too large a portion of
his funds are in this one medium.* Each decline—however tempo-
rary it proves in the sequel—will accentuate his problem; and
internal and external pressures are likely to force him to take what
seems to be a goodly profit, but one far less than the ultimate
bonanza.^4Three Recommended Fields for “Enterprising Investment”
To obtain better than average investment results over a long pull
requires a policy of selection or operation possessing a twofold
merit: (1) It must meet objective or rational tests of underlying
soundness; and (2) it must be different from the policy followed by
most investors or speculators. Our experience and study leads us
to recommend three investment approaches that meet these crite-
ria. They differ rather widely from one another, and each may
require a different type of knowledge and temperament on the part
of those who assay it.
162 The Intelligent Investor* Today’s equivalent of investors “who have a close relationship with the par-
ticular company” are so-called control persons—senior managers or direc-
tors who help run the company and own huge blocks of stock. Executives
like Bill Gates of Microsoft or Warren Buffett of Berkshire Hathaway have
direct control over a company’s destiny—and outside investors want to see
these chief executives maintain their large shareholdings as a vote of confi-
dence. But less-senior managers and rank-and-file workers cannot influence
the company’s share price with their individual decisions; thus they should
not put more than a small percentage of their assets in their own employer’s
stock. As for outside investors, no matter how well they think they know the
company, the same objection applies.