Profit And Loss Short Quotes

The most important thing to understand is that while we courted, Americans dated, a pragmatic custom whereby a male and a female set a mutually agreeable time to meet, as if to negotiate a potentially profitable business venture. Americans understood dating to be about investments and gains, short or long term , but we saw romance and courtship as being about losses. After all, the only worthwhile courtship involved persuading a woman who could not be persuaded, not a woman already predisposed to examine her calendar for her availability.

The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator’s primary interest lies in anticipating and profiting from market fluctuations. The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell. It is far from certain that the typical investor should regularly hold off buying until low market levels appear, because this may involve a long wait, very likely the loss of income, and the possible missing of investment opportunities. On the whole it may be better for the investor to do his stock buying whenever he has money to put in stocks, except when the general market level is much higher than can be justified by well-established standards of value. If he wants to be shrewd he can look for the ever-present bargain opportunities in individual securities. Aside from forecasting the movements of the general market, much effort and ability are directed on Wall Street toward selecting stocks or industrial groups that in matter of price will “do better” than the rest over a fairly short period in the future. Logical as this endeavor may seem, we do not believe it is suited to the needs or temperament of the true investor—particularly since he would be competing with a large number of stock-market traders and first-class financial analysts who are trying to do the same thing. As in all other activities that emphasize price movements first and underlying values second, the work of many intelligent minds constantly engaged in this field tends to be self-neutralizing and self-defeating over the years. The investor with a portfolio of sound stocks should expect their prices to fluctuate and should neither be concerned by sizable declines nor become excited by sizable advances. He should always remember that market quotations are there for his convenience, either to be taken advantage of or to be ignored. He should never buy a stock because it has gone up or sell one because it has gone down. He would not be far wrong if this motto read more simply: “Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.” An

The New Sell & Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines (John Wiley & Sons, 2011).

Since our civilization is irreversibly dependent on electronics, abolition of EMR is out of the question. However, as a first step toward averting disaster, we must halt the introduction of new sources of electromagnetic energy while we investigate the biohazards of those we already have with a completeness and honesty that have so far been in short supply. New sources must be allowed only after their risks have been evaluated on the basis of the knowledge acquired in such a moratorium. 
With an adequately funded research program, the moratorium need last no more than five years, and the ensuing changes could almost certainly be performed without major economic trauma. It seems possible that a different power frequency—say 400 hertz instead of 60—might prove much safer. Burying power lines and providing them with grounded shields would reduce the electric fields around them, and magnetic shielding is also feasible. 
A major part of the safety changes would consist of energy-efficiency reforms that would benefit the economy in the long run. These new directions would have been taken years ago but for the opposition of power companies concerned with their short-term profits, and a government unwilling to challenge them. It is possible to redesign many appliances and communications devices so they use far less energy. The entire power supply could be decentralized by feeding electricity from renewable sources (wind, flowing water, sunlight, georhermal and ocean thermal energy conversion, and so forth) into local distribution nets. This would greatly decrease hazards by reducing the voltages and amperages required. Ultimately, most EMR hazards could be eliminated by the development of efficient photoelectric converters to be used as the primary power source at each point of consumption. The changeover would even pay for itself, as the loss factors of long-distance power transmission—not to mention the astronomical costs of building and decommissioning short-lived nuclear power plants—were eliminated. Safety need not imply giving up our beneficial machines. 
Obviously, given the present technomilitary control of society in most parts of the world, such sane efficiency will be immensely difficult to achieve. Nevertheless, we must try. Electromagnetic energy presents us with the same imperative as nuclear energy: Our survival depends on the ability of upright scientists and other people of goodwill to break the military-industrial death grip on our policy-making institutions.

To summarize my trading strategy for VWAP False Breakouts: Once I’ve made my watchlist for the day, I monitor the price action around VWAP at the Open and during the morning session for the Stocks in Play. A good Stock in Play shows respect toward VWAP. If the Stock in Play sells off below the VWAP but bounces back and breaks out above the VWAP, it means the buyers are gaining control and short sellers perhaps had to cover. However, if it loses the VWAP again in the Late-Morning (from 10:30 a.m. to 12 p.m.), it means that this time the buyers were mostly weak or exhausted. This provides a short opportunity with a stop loss above VWAP. The profit target can be the by then low of the day, or any other important technical level. I try to go short when a Stock in Play has lost the VWAP. Sometimes I go short before the price loses the VWAP, to get a good entry while it is ticking down toward VWAP in the anticipation of a VWAP loss. However, be very careful, for the job of a trader is identification and not anticipation. Take small size and add more shares on the way down if you have truly identified a good trading setup.

To the untrained eye, the Wall Street people who rode from the Connecticut suburbs to Grand Central were an undifferentiated mass, but within that mass Danny noted many small and important distinctions. If they were on their BlackBerrys, they were probably hedge fund guys, checking their profits and losses in the Asian markets. If they slept on the train they were probably sell-side people—brokers, who had no skin in the game. Anyone carrying a briefcase or a bag was probably not employed on the sell side, as the only reason you’d carry a bag was to haul around brokerage research, and the brokers didn’t read their own reports—at least not in their spare time. Anyone carrying a copy of the New York Times was probably a lawyer or a back-office person or someone who worked in the financial markets without actually being in the markets. Their clothes told you a lot, too. The guys who ran money dressed as if they were going to a Yankees game. Their financial performance was supposed to be all that mattered about them, and so it caused suspicion if they dressed too well. If you saw a buy-side guy in a suit, it usually meant that he was in trouble, or scheduled to meet with someone who had given him money, or both. Beyond that, it was hard to tell much about a buy-side person from what he was wearing. The sell side, on the other hand, might as well have been wearing their business cards: The guy in the blazer and khakis was a broker at a second-tier firm; the guy in the three-thousand-dollar suit and the hair just so was an investment banker at J.P. Morgan or someplace like that. Danny could guess where people worked by where they sat on the train. The Goldman Sachs, Deutsche Bank, and Merrill Lynch people, who were headed downtown, edged to the front—though when Danny thought about it, few Goldman people actually rode the train anymore. They all had private cars. Hedge fund guys such as himself worked uptown and so exited Grand Central to the north, where taxis appeared haphazardly and out of nowhere to meet them, like farm trout rising to corn kernels. The Lehman and Bear Stearns people used to head for the same exit as he did, but they were done. One reason why, on September 18, 2008, there weren’t nearly as many people on the northeast corner of Forty-seventh Street and Madison Avenue at 6:40 in the morning as there had been on September 18, 2007.

The third serious problem the culture of customer service as we know it creates is turning every profession into a customer service tool to generate profits. In doing so, we risk the loss of creativity, quality, and critical thinking in many walks of life. Nowhere is this risk clearer and more damaging than viewing students at different educational institutions as customers, and nowhere this trend has been happening more rapidly than at schools, colleges, and universities, especially at private institutions. There is severe damage done to creativity and critical thinking when all students want is an A, and in fact feel entitled to get it since they (or their parents) are paying hundreds of thousands of dollars to attend elite schools. Many educators are under enormous pressure to give students grades they do not deserve in order to avoid receiving bad student evaluations (or to ensure getting good ones). This pressure is intensifying as academic jobs become increasingly contingent and precarious, where teaching staff are hired under short contracts only renewed based on so-called ‘performance,’ which is often measured by student evaluations and enrollment. When this happens, academic and intellectual compromises and corruption increase. Colleagues at elite American universities have been pressured to give students grades no lower than a B, with the explanation that this is what is ‘expected.’ Rampant grade inflation is unethical and unacceptable. Unfortunately, when graduate instructors resist professors’ instructions to fix grades by grading according to independent criteria of intellectual merit, they may be verbally chastised or worse, fired. This humiliation not only reinforces the norm of inflating grades, it also bolsters the power of the tenured professors who instruct their teaching assistants to do it.

To summarize my trading strategy for VWAP Moving Average Trend trading: When I am monitoring a Stock in Play and notice a trend is establishing around a moving average (usually 9 EMA) in the Late-Morning session, I consider VWAP Moving Average Trend trading. If the stock has already lost the VWAP (from a VWAP False Breakout), it most likely will stay below the VWAP. Similarly, if the stock squeezed above the VWAP in the Late-Morning session, it is most likely that it will stay above the VWAP, as it means the buyers are in control. Once I learn that either 9 or 20 EMA are acting as either a support or resistance, I buy the stock after confirmation of moving averages as a support, but only if I can clearly see it “held” the VWAP. Similarly, I go short below the moving averages if I have the confirmation that it has “lost” the VWAP in the Late-Morning session. I buy or sell short as close as possible to the moving average line (in order to have a small stop). My stop will usually be 5 to 10 cents below the moving average line or, if a candlestick, close below the moving average (for long positions). For short positions, a close above the moving average would stop me out. I ride the trend until the break of 9 or 20 EMA. Usually, 20 EMA is a stronger support or resistance, so it is better to wait for that. I usually do not use trailing stops and I constantly monitor the trend with my eyes, but I know that many traders also use trailing stops. If the stock is moving really high away from the moving average, offering me an equally really nice unrealized profit, I may take some profit, usually at the 1/4 or half-position. I do not always wait until the break of moving average for my exit. Traders will say: you can never go broke by taking good profits. If the price pulls back to the moving average, I may add again to my position and continue the VWAP Moving Average Trend trade. Remember, when you take profit, you should always bring your stop loss to break-even. Never go red on a stock that you already booked some profit on.

To summarize my ORB Strategy: After I build my watchlist in the morning, I closely monitor the shortlisted stocks in the first five minutes after the Open. I identify their opening range and their price action. How many shares are being traded? Is the stock jumping up and down or does it have a directional upward or downward movement? Is it high volume with large orders only, or are there many orders going through? I prefer stocks that have high volume, but also with numerous different orders being traded. If the stock has traded 1 million shares, but those shares were only ten orders of 100,000 shares each, it is not a liquid stock to trade. Volume alone does not show the liquidity; the number of orders being sent to the exchange is as important. The opening range must be significantly smaller than the stock’s Average True Range (ATR). I have ATR as a column in my Trade Ideas scanner. After the close of the first five minutes of trading, the stock may continue to be traded in that opening range in the next five minutes. But, if I see the stock is breaking the opening range, I enter the trade according to the direction of the breakout: long for an upward breakout and short for a downward move. My stop loss is a close below VWAP for the long positions and a break above VWAP for the short positions. My profit target is the next important technical level, such as: (1) important intraday daily levels that I identify in the pre-market, (2) moving averages on a daily chart, and/or (3) previous day close. If there was no obvious technical level for the exit and profit target, I exit when a stock shows signs of weakness (if I am long) or strength (if I am short). For example, if the price makes a new 5-minute low, that means weakness, and I consider selling my position if I am long. If I am short and the stock makes a new 5-minute high, then it could be a sign of strength and I consider covering my short position. My strategy above was for a 5-minute ORB, but the same process will also work well for 15-minute or 30-minute ORBs.

How exactly the debt should be funded was to be the most inflammatory political issue. During the Revolution, many affluent citizens had invested in bonds, and many war veterans had been paid with IOUs that then plummeted in price under the confederation. In many cases, these upright patriots, either needing cash or convinced they would never be repaid, had sold their securities to speculators for as little as fifteen cents on the dollar. Under the influence of his funding scheme, with government repayment guaranteed, Hamilton expected these bonds to soar from their depressed levels and regain their full face value. This pleasing prospect, however, presented a political quandary. If the bonds appreciated, should speculators pocket the windfall? Or should the money go to the original holders—many of them brave soldiers—who had sold their depressed government paper years earlier? The answer to this perplexing question, Hamilton knew, would define the future character of American capital markets. Doubtless taking a deep breath, he wrote that “after the most mature reflection” about whether to reward original holders and punish current speculators, he had decided against this approach as “ruinous to public credit.”25 The problem was partly that such “discrimination” in favor of former debt holders was unworkable. The government would have to track them down, ascertain their sale prices, then trace all intermediate investors who had held the debt before it was bought by the current owners—an administrative nightmare. Hamilton could have left it at that, ducking the political issue and taking refuge in technical jargon. Instead, he shifted the terms of the debate. He said that the first holders were not simply noble victims, nor were the current buyers simply predatory speculators. The original investors had gotten cash when they wanted it and had shown little faith in the country’s future. Speculators, meanwhile, had hazarded their money and should be rewarded for the risk. In this manner, Hamilton stole the moral high ground from opponents and established the legal and moral basis for securities trading in America: the notion that securities are freely transferable and that buyers assume all rights to profit or loss in transactions. The knowledge that government could not interfere retroactively with a financial transaction was so vital, Hamilton thought, as to outweigh any short-term expediency. To establish the concept of the “security of transfer,” Hamilton was willing, if necessary, to reward mercenary scoundrels and penalize patriotic citizens. With this huge gamble, Hamilton laid the foundations for America’s future financial preeminence.

The government would have to track them down, ascertain their sale prices, then trace all intermediate investors who had held the debt before it was bought by the current owners—an administrative nightmare. Hamilton could have left it at that, ducking the political issue and taking refuge in technical jargon. Instead, he shifted the terms of the debate. He said that the first holders were not simply noble victims, nor were the current buyers simply predatory speculators. The original investors had gotten cash when they wanted it and had shown little faith in the country’s future. Speculators, meanwhile, had hazarded their money and should be rewarded for the risk. In this manner, Hamilton stole the moral high ground from opponents and established the legal and moral basis for securities trading in America: the notion that securities are freely transferable and that buyers assume all rights to profit or loss in transactions. The knowledge that government could not interfere retroactively with a financial transaction was so vital, Hamilton thought, as to outweigh any short-term expediency. To establish the concept of the “security of transfer,” Hamilton was willing, if necessary, to reward mercenary scoundrels and penalize patriotic citizens. With this huge gamble, Hamilton laid the foundations for America’s future financial preeminence. As his report progressed, Hamilton tiptoed through a field seeded thickly with deadly political traps. The next incendiary issue was that some debt was owed by the thirteen states, some by the federal government. Hamilton decided to consolidate all the debt into a single form: federal

Pricing is a double edge sword, it shows profits in theory but loss in reality.

When people fail to respect the P/PC Balance in their use of physical assets in organizations, they decrease organizational effectiveness and often leave others with dying geese. For example, a person in charge of a physical asset, such as a machine, may be eager to make a good impression on his superiors. Perhaps the company is in a rapid growth stage and promotions are coming fast. So he produces at optimum levels—no downtime, no maintenance. He runs the machine day and night. The production is phenomenal, costs are down, and profits skyrocket. Within a short time, he’s promoted. Golden eggs! But suppose you are his successor on the job. You inherit a very sick goose, a machine that, by this time, is rusted and starts to break down. You have to invest heavily in downtime and maintenance. Costs skyrocket; profits nose-dive. And who gets blamed for the loss of golden eggs? You do. Your predecessor liquidated the asset, but the accounting system only reported unit production, costs, and profit. The P/PC Balance is particularly important as it applies to the human assets of an organization—the customers and the employees. I

Unless you do not understand that loss in profits is a loss, you will not accumulate wealth

To do index arbitrage, PNP developed techniques in the mid-1980s for finding baskets of stocks that did a particularly good job of tracking an index. We used this very profitably the day after “Black Monday,” October 19, 1987, to capture a spread of over 10 percent between the S&P 500 Index and the futures contracts on it. Quants have honed this to a fine art and, through their trading, generally keep the price discrepancy very small. To cut taxes, start with a tracking basket and, each time a stock drops, say, 10 percent, sell the loser and reinvest the proceeds in another stock or stocks chosen so the new basket continues to track well. If you want only short-term losses, which is usually best, sell within a year of purchase. I advise anyone considering doing this in a serious way to study it first with simulations using historical databases.

Since the prices of the two securities tended to move together, the important idea of “hedging” occurred to me, in which I could use this relationship to exploit any mispricing of the warrant and simultaneously reduce the risk of doing so. To form a hedge, take two securities whose prices tend to move together, such as a warrant and the common stock it can be used to purchase, but which are comparatively mispriced. Buy the relatively underpriced security and sell short the relatively overpriced security. If the proportions in the position are chosen well, then even though prices fluctuate, the gains and losses on the two sides will approximately offset or hedge each other. If the relative mispricing between the two securities disappears as expected, close the position in both and collect a profit.

Mary Carter Paint Company. Founded in 1958 as the successor to a 1908 company, it started as an acquirer of other paint companies, then evolved into a resort and casino developer in the Bahamas. Changing its name to Resorts International, it divested itself of the paint business and name. In 1972 the company had warrants that sold for 27 cents when the stock traded at $8 a share. The warrants were so cheap because they were worthless unless the stock traded above $40 a share. Fat chance. Since our model said the warrants were worth $4 a share, we bought all we could at the unbelievable bargain price of 27 cents each, which turned out to be 10,800 warrants at a total cost, after commissions, of $3,200. We hedged our risk of loss by shorting eight hundred shares of the common stock at $8. When the stock later fell to $1.50 a share, we bought back our short stock for a profit of about $5,000. Our gain now consisted of the warrants for “free” plus about $1,800 in cash. The warrants were trading close to zero but below the tiny amount the model said they were worth, so I decided we should put them away and forget them. Six busy years passed. Then in 1978 we started getting calls from people who wanted to buy our warrants. The company had purchased property in Atlantic City, New Jersey, after which it successfully lobbied, along with others, to bring casino gambling to the state, limited to Atlantic City. On May 26, 1978, Resorts opened the first US casino outside Nevada. Having received early approval, they had no competition and reaped windfall profits until other casinos opened late in 1979. With the stock now trading at $15 a share, ten times its earlier lowest price, and the warrants trading between $3 and $4, the model said they were worth about $7 or $8. So, instead of selling and reaping a $30,000 to $40,000 profit, I bought more warrants and sold stock short to hedge the risk of loss. As the stock broke through the $100 mark, we were still buying warrants and shorting stock. We finally sold the 27-cent warrants and others for above $100 each. We ultimately made more than $1 million.

1)Insufficient research and knowledge: Many beginners dive into investing without fully understanding the fundamentals or conducting thorough research. It's crucial to educate yourself about different investment options, financial markets, and investment strategies before getting started. 2)Failure to establish clear investment goals: Investing without clear goals can lead to haphazard decision-making and poor portfolio management. Beginners should define their investment objectives, such as saving for retirement, buying a home, or funding education, and then align their investment strategy accordingly. 3)Lack of diversification: Beginners sometimes make the mistake of investing all their money in a single investment or asset class. This lack of diversification can expose them to significant risks. It's important to spread investments across different asset classes, industries, and geographies to reduce the impact of any individual investment's performance on the overall portfolio. 4)Emotion-driven decision-making: Emotions can often cloud investment decisions. Beginners may get swayed by market hype, fear, or short-term fluctuations, leading to impulsive buying or selling. It's essential to make investment decisions based on rational analysis and a long-term perspective rather than reacting to short-term market movements. 5)Chasing quick profits: Beginner investors may be tempted by get-rich-quick schemes or investments promising high returns in a short period. Such investments often involve higher risks, and pursuing quick profits can lead to significant losses. It's important to have realistic return expectations and focus on long-term, sustainable investment strategies.

That was because of the uptick rule. The rule was part of the Securities Exchange Act of 1934 (rule 10a-1). It specified that, with certain exceptions, short-sale transactions are allowed only at a price higher than the last previous different price (an “uptick”). This rule was supposed to prevent short sellers from deliberately driving down the price of a stock. Seeing an enormous profit potential from capturing the unprecedented spread between the futures and the index, I wanted to sell stocks short and buy index futures to capture the excess spread. The index was selling at 15 percent, or 30 points, over the futures. The potential profit in an arbitrage was 15 percent in a few days. But with prices collapsing, upticks were scarce. What to do? I figured out a solution. I called our head trader, who as a minor general partner was highly compensated from his share of our fees, and gave him this order: Buy $5 million worth of index futures at whatever the current market price happened to be (about 190), and place orders to sell short at the market, with the index then trading at about 220, not $5 million worth of assorted stocks—which was the optimal amount to best hedge the futures—but $10 million. I chose twice as much stock as I wanted, guessing only about half would actually be shorted because of the scarcity of the required upticks, thus giving me the proper hedge. If substantially more or less stock was sold short, the hedge would not be as good but the 15 percent profit cushion gave us a wide band of protection against loss.

We soon learned what had happened. A twenty-three-year-old college student had sent a report to the electronic news service Internet Wire for which he formerly worked, purporting to be an official news release from Emulex (EMLX). The report claimed that the company’s president was resigning, good positive earnings for the last two years were being corrected to show large losses, and the SEC was to investigate. This fake information spread quickly and the stock was down 56 percent by the time NASDAQ halted trading. The hoaxer had earlier lost $100,000 selling Emulex short and managed to regain this plus a $250,000 profit before he was apprehended the following week. In

The decision to disrupt a business model that is working for you requires no small amount of courage. It means intentionally taking on short-term losses in the hope that a long-term risk will pay off. Routines and priorities get disrupted. Traditional ways of doing business get slowly marginalized and eroded—and start to lose money—as a new model takes over. That’s a big ask, in terms of a company’s culture and mindset. When you do it, you’re saying to people who for their entire careers have been compensated based on the success of their traditional business: “Don’t worry about that too much anymore. Worry about this instead.” But this isn’t profitable yet, and won’t be for a while. Deal with this kind of uncertainty by going back to basics: Lay out your strategic priorities clearly. Remain optimistic in the face of the unknown. And be accessible and fair-minded to people whose work lives are being thrown into disarray.

you may want to start with shorting 100 shares. When the stock makes a new low from that level, the scalpers and algorithms will usually start scalping when the level breaks to the downside with a profit of 5 to 10 cents. When those scalpers take their profit, the price often pulls back to that support level to test it as a new resistance level. If it is held below the support level (now acting as a resistance level), you can start adding to your short position on the way down. If it does not act as a resistance level and the price moves back up, you will get stopped out for a small loss because you had only shorted 100 shares.

2.38 = Krishna: Your mood should be similar during happiness and sadness, profit and loss, victory and defeat. Thereafter work hard in the direction of truth. In this way you will never incur sin in your life and your life would be filled with great deeds.

TAX-SAVVY IDEAS We suggest 14 tax-reducing ideas for tax-savvy investors. Most are easy to understand and to implement. We can think of no better way for most taxpayers to maximize their after-tax returns. Use tax-advantaged accounts (401(k), 403(b), IRAs, 529 tuition plans, etc.). Buy fund shares after the distribution date. Place tax-INefficent funds in retirement accounts, and tax-Efficient funds in taxable accounts. Use tax-managed or tax-efficient index funds in taxable accounts. Avoid balanced funds (stocks and bonds) in taxable accounts. Keep taxable fund turnover low to avoid capital-gains taxes. Avoid short-term gains by holding for more than 12 months. Sell losing shares before year-end (tax-loss harvest). Sell profitable shares after the new year (to delay tax payment). Determine the most favorable tax-basis method before selling fund shares. Consider municipal bonds and U.S. Savings Bonds for taxable accounts. During years of low income, consider converting to a Roth. Consider gifts to charities of securities with large capital gains. Appreciated holdings in taxable accounts are capital gains and income tax free if left to heirs.

Your mood should be similar during happiness and sadness, profit and loss, victory and defeat. Thereafter work hard in the direction of truth. In this way you will never incur sin in your life and your life would be filled with great deeds.

Nonetheless, Braudel’s definitional opposition of capitalism and market economy is misleading. Even in the early modern era, and even in its “upper echelon,” the kind of capitalism taking shape was characterized by a great deal of competition, profit and loss, rise and fall, opportunity and risk. It was rooted in the market economy and, as a rule, contributed not to the elimination of markets but to their becoming more universal. Essentially, this remains true to this day.

Scales Balance is profit and losses. Acid and alkali. Vinegar and sugar. Depression and euphoria.

Pair 3: American Home Products Co. (drugs, cosmetics, household products, candy) and American Hospital Supply Co. (distributor and manufacturer of hospital supplies and equipment) These were two “billion-dollar good-will” companies at the end of 1969, representing different segments of the rapidly growing and immensely profitable “health industry.” We shall refer to them as Home and Hospital, respectively. Selected data on both are presented in Table 18-3. They had the following favorable points in common: excellent growth, with no setbacks since 1958 (i.e., 100% earnings stability); and strong financial condition. The growth rate of Hospital up to the end of 1969 was considerably higher than Home’s. On the other hand, Home enjoyed substantially better profitability on both sales and capital.† (In fact, the relatively low rate of Hospital’s earnings on its capital in 1969—only 9.7%—raises the intriguing question whether the business then was in fact a highly profitable one, despite its remarkable past growth rate in sales and earnings.) When comparative price is taken into account, Home offered much more for the money in terms of current (or past) earnings and dividends. The very low book value of Home illustrates a basic ambiguity or contradiction in common-stock analysis. On the one hand, it means that the company is earning a high return on its capital—which in general is a sign of strength and prosperity. On the other, it means that the investor at the current price would be especially vulnerable to any important adverse change in the company’s earnings situation. Since Hospital was selling at over four times its book value in 1969, this cautionary remark must be applied to both companies. TABLE 18-3. Pair 3. CONCLUSIONS: Our clear-cut view would be that both companies were too “rich” at their current prices to be considered by the investor who decides to follow our ideas of conservative selection. This does not mean that the companies were lacking in promise. The trouble is, rather, that their price contained too much “promise” and not enough actual performance. For the two enterprises combined, the 1969 price reflected almost $5 billion of good-will valuation. How many years of excellent future earnings would it take to “realize” that good-will factor in the form of dividends or tangible assets? SHORT-TERM SEQUEL: At the end of 1969 the market evidently thought more highly of the earnings prospects of Hospital than of Home, since it gave the former almost twice the multiplier of the latter. As it happened the favored issue showed a microscopic decline in earnings in 1970, while Home turned in a respectable 8% gain. The market price of Hospital reacted significantly to this one-year disappointment. It sold at 32 in February 1971—a loss of about 30% from its 1969 close—while Home was quoted slightly above its corresponding level.*