"The common-stocks-as-long-term-investments doctrine. Along with this idea as to what constituted the basis for common stock selection emerged a companion theory that common stocks represented the most profitable and therefore the most desirable media for long-term investment. This gospel was based upon a certain amount of research, showing that diversified lists of common stocks has regularly increased in value over stated intervals of time for many years past. The figures indicated higher income return and a greater principal profit than purchases of standard bonds.
The combination of these two ideas supplied the "investment theory" upon which the (years omitted) stock market proceeded. The theory ran as follows:
1. "The value of a common stock depends on what it can earn in the future."
2. "Good common stocks are those which have shown a rising trend of earnings."
3. "Good common stocks will prove sound and profitable investments."
These statements sound innocent and plausible. Yet they concealed two theoretical weaknesses that could and did result in untold mischief. The first of these defects was that they abolished the fundamental distinctions between investment and speculation. The second was that they ignored the price of a stock in determining whether or not it was a desirable purchase."
And then try re-reading it where you replace the word "common" with "Deep Creek" and the word "stock(s)" with "real estate". Kind of makes you think about history repeating itself doesn't it? I would be willing to bet that most will guess the wrong years omitted, but give it a try and prove me wrong. In a few weeks I'll give the answer and the source.
Don't forget to check back to Dan's Deep Creek Blog for future updates.
No comments:
Post a Comment