Not exact matches
The issue is
very simple: U.S. wealth is overstated because the
prices of stocks, bonds (particularly corporate), even real estate, are excessive in
relation to the replacement value of the underlying assets, and the income streams that are derived from them.
With takeaway number four in mind, Graham advocated buying companies at
very low
prices in
relation to their existing bodies of work.
That is, when stock
prices get
very high in
relation to earnings, they subsequently tend
to perform poorly.
Clearly, a good route
to realizing above - average returns would have been adhering
to a process — even a
very simple one — for buying companies at low
prices in
relation to their sales, book values, or earnings.
Over the past 50 years, abundant evidence shows that it would have been fruitful
to buy companies that were
priced very low in
relation to their earnings.