Stock Market Warning: Danger Ahead!

by Benjamin Graham



This article focuses on stock market run throughout the decade of the 1950s, with only one setback. It has thus established a new record for the length of its rise, although it has not equaled the extent of the record advance of the 1920s: 325 percent in this market versus 450 percent from 1921-1929. In order to judge today's market level, it is desirable, perhaps essential, to have a clear picture of its past behavior. Speculators often prosper through ignorance; it is a cliche that in a roaring bull market knowledge is superfluous and experience a handicap. But the typical experience of the speculator is one of temporary profit and ultimate loss. If experience cannot help today's investor, then one must be logical and conclude that there is no such thing as investment in common stocks and that everyone interested in them should confess himself a speculator. This is just about what has actually happened in recent years, only in reverse. Everyone now calls himself an investor, including a huge horde of speculators.

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