The Testimony Of Benjamin Graham - Part II

Last Thursday I posted on testimony that Benjamin Graham gave to Congress in the early 1950's. While some would consider this to be ancient history, I found a passage that is applicable to the situation today, as it pertains to the sentiment and psychology that is gripping the market.

"With respect to the causes of the rise in the market since September 1953, my statement indicates I would emphasize very much the change in investment and speculative sentiment, more than any change in basic economic factors. I wanted to point out that that carries an element of danger because a change in of sentiment for the better may be followed by a change in sentiment for the worse."

We are certainly seeing a change in sentiment for the worst, and if you listen to some commentators, we are heading for the end of civilization. This is nonsense, of course, and represents nothing more than the opposite of what Greenspan called "irrational exuberance."

Turn your TV off and start looking for stocks that will get through the next few years unscathed and make you rich.
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