Since its first publication in 1949, revisions of The Intelligent Investor have appeared at intervals of approximately five years. In updating the current version we shall have to deal with quite a number of new developments since the 1965 edition was written. These include:
- An unprecedented advance in the interest rate on high-grade bonds.
- A fall of about 35% in the price level of leading common stocks, ending in May 1970. This was the highest percentage decline in some 30 years. (Countless issues of lower quality had a much larger shrinkage.)
- A persistent inflation of wholesale and consumer’s prices, which gained momentum even in the face of a decline of general business in 1970.
- The rapid development of “conglomerate” companies, franchise operations, and other relative novelties in business and finance. (These include a number of tricky devices such as “letter stock,”1 proliferation of stock-option warrants, misleading names, use of foreign banks, and others.)†
- Bankruptcy of our largest railroad, excessive short- and long- term debt of many formerly strongly entrenched companies, and even a disturbing problem of solvency among Wall Street houses.*
- The advent of the “performance” vogue in the management of investment funds, including some bank-operated trust funds, with disquieting results.
