- A chart issued by American Telephone & Telegraph in 1971 indi-
cates that the rates charged for residential telephone services
were somewhat less in 1970 than in 1960. - Reported in the Wall Street Journal,October, 1970.
Chapter 3. A Century of Stock-Market History:
The Level of Stock Prices in Early 1972- Both Standard & Poor’s and Dow Jones have separate averages for
public utilities and transportation (chiefly railroad) companies. Since
1965 the New York Stock Exchange has computed an index represent-
ing the movement of all its listed common shares. - Made by the Center for Research in Security Prices of the University
of Chicago, under a grant from the Charles E. Merrill Foundation. - This was first written in early 1971 with the DJIA at 940. The contrary
view held generally on Wall Street was exemplified in a detailed
study which reached a median valuation of 1520 for the DJIA in 1975.
This would correspond to a discounted value of, say, 1200 in mid-
1971. In March 1972 the DJIA was again at 940 after an intervening
decline to 798. Again, Graham was right. The “detailed study” he men-
tions was too optimistic by an entire decade: The Dow Jones Industrial
Average did not close above 1520 until December 13, 1985!
Chapter 4. General Portfolio Policy: The Defensive Investor- A higher tax-free yield, with sufficient safety, can be obtained from
certainIndustrial Revenue Bonds,a relative newcomer among financial
inventions. They would be of interest particularly to the enterprising
investor.
Chapter 5. The Defensive Investor and Common Stocks
1.Practical Formulas for Successful Investing,Wilfred Funk, Inc., 1953.- In current mathematical approaches to investment decisions, it has be-
come standard practice to define “risk” in terms of average price varia-
tions or “volatility.” See, for example, An Introduction to Risk and Return,
by Richard A. Brealey, The M.I.T. Press, 1969. We find this use of the
word “risk” more harmful than useful for sound investment deci-
sions—because it places too much emphasis on market fluctuations. - All 30 companies in the DJIA met this standard in 1971.
580 Endnotes