When Stocks Become Collectibles
Cash Was King Traditionally, equity research evaluated the ability to generate cash. Published three years after Joy of Cooking and equally influential in its field, Benjamin Graham’s Security Analysis recommended buying companies that were valued by the stock market at less than the amount of money on their books. That was the ideal situation. Failing such opportunities, prudent investors could purchase firms that had high expected future cash flows relative to their stocks’ current price. For Graham, what mattered was corporate operations, rather than the actions of rival investors. Wr...