Tech Stock Valuation

Mr. Market quotes a ridiculously high price or buy when the price is ridiculously

low. In Graham’s (1973, p. 109) words: “… price fluctuations have only one sig-

nificant meaning for the true investor. They provide him with an opportunity to

buy wisely when prices fall sharply and to sell wisely when they advance a great

deal. At other times, he will do better if he forgets about the stock market and

pays attention to his dividend returns and the operating results of his companies.”

With respect to inherently unpredictable moves in the overall market, the

point of this chapter is simple but important for investment management. As sug-

gested by the efficient ...