Message-ID: <9497165.1075858414230.JavaMail.evans@thyme> Date: Thu, 26 Apr 2001 12:30:00 -0700 (PDT) From: sneal12@mindspring.com To: scott.neal@enron.com Subject: Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable X-From: "scott neal" X-To: X-cc: X-bcc: X-Folder: \Scott_Neal_Jun2001\Notes Folders\Notes inbox X-Origin: Neal-S X-FileName: sneal.nsf =01&The 'new-era' doctrine - that 'good' stocks (or 'blue chips') where so= und=20 investments regardless of how high the price paid for them -- was at botto= m=20 only a means for rationalizing under the title of 'investment' the well-ni= gh=20 universal capitulation to the gambling fever=01( Why did the investing pub= lic=20 turn its attention from dividends, from asset values, and from earnings, t= o=20 transfer it almost exclusively to the earnings trend? The answer was, first= , =20 that the records of the past were proving an undependable guide to=20 investment; and secondly, that the rewards offered by the future had becom= e=20 irresistibly alluring ... The notion that the desirability of a common sto= ck=20 was entirely independent of its prices seems incredibly absurd. Yet the=20 new-era theory led directly to this thesis. If a stock was selling at 35= =20 times the maximum recorded earnings, instead of 10 times its average=20 earnings, which was the pre-boom standard, the conclusion to be drawn was= =20 not that the stock was too high but merely that the standard of value had= =20 been raised. Instead of judging the market price by established standards = of=20 value, the new-era based its standards of value on the market price.=018 - Benjamin Graham & David Dodd, Security Analysis, 1934.