Just completed reading the book intelligent investor by Graham
Common sense is word that defines the book,that seeks to maximise the objective of the books
All the scenarios being discussed is focussed on the goal of maximising the returns of the investor reading the book.this is elaborated by following a multi level thinking of various investors and their situation in life .
Historical Data is used to explain various practical ideas for buying stock securities,even the consequences of stock purchases is discussed very simply, highlighting the fact that Mr.Market is not always rational and even well thought out stock picks could sometimes yield less returns.
The irrational echuberance during bubbles and fear during downturns are highlighted,to caution investors about the methodology to be adopted,which removes emotion from investing and also to not to follow the crowd while making buy or sell decisions
The margin of safety being discussed while selecting stocks is based on historical Data, and is directly related to the price of the stock,where the need to find ,whether the intrinsic value of company is more than the price being quoted in the share market.
Good observation - no stock is good or bad,so long as it is purchased at the right price.over long periods (say 60 years)the stock price can go to rock bottom and then swing to the other extremes too,so one needs to know this tendency of market pricing of stocks,which is relative to the performance of the company during that particular year,for a long term investor all these movements of stock prices is just noise.
Diversification is suggested as a hedge against lesser returns.
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