Common Stocks and Uncommon Profits and Other Writings

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in myself the ability to determine within fairly broad limits what those 
earnings might be a few years from now, I would have unlocked the key 
both to avoiding losses and to making magnificent profits! 
In addition to learning that a low price-earnings ratio was just as apt 
to be a sign that a stock was an investment trap as that it was a bargain, 
acute awareness of my miserable investment performances during the 
Great Bear Market made me vividly aware of something of possibly
even greater importance. I had been spectacularly right in my timing of
when the bull market bubble was about to burst, and almost right in 
judging the full force of what was to happen. Yet except for a possible
small boost in my reputation among a very small circle of people, this 
had done me no good whatsoever. From then on, I was to realize that
all the correct reasoning about an investment policy or about the desir- 
ability or purchase or sale of any particular stock did not have the least 
bit of value until it was translated into action through the completion 
of specific transactions. 
A CHANCE TO DO MY THING 
In the spring of 1930 I made a change of employers. I only mention this 
because it triggered the events that were to cause the emergence of the 
investment philosophy that has guided me since that time. A regional 
brokerage firm came to me and made me a salary offer which, at age 22
and for that time and place, I found quite difficult to refuse. Further- 
more, they offered me a vastly more appealing work assignment than the
dissatisfying experience as a “statistician” in the investment banking arm 
of the bank. With no assigned duties whatsoever, I was to be free to 
devote my time to finding individual stocks which I thought were par- 
ticularly suitable candidates for either purchase or sale because of their 
characteristics. I was then to write reports on my conclusions to circu- 
late among the brokers employed by this firm to help them stimulate 
business that would be profitable for their clients. 
This offer came to me just after Herbert Hoover had made his 
famous “Prosperity is just around the corner” statement. Several partners
of the firm involved implicitly believed this. As a result of the 1929
crash, their total payroll had dropped from 125 employees to 75. They 
told me that if I accepted their offer, I would be number 76. I was just 
as bearish at the time as they were bullish. I felt sure the bear market was