Common Stocks and Uncommon Profits and Other Writings

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the unfavorable aspects of what was happening, as well as the favor- 
able potentials. 
There was another element which influenced me greatly: a major 
reason the company’s profits were so poor was that Rogers was spend-
ing a quite disproportionate amount of money on a single new product 
development seeming to offer prospects of great results. This was divert-
ing both money and people from other potentially exciting new prod-
ucts which were getting less corporate effort. New products of this type 
do have magnificent potential. When the painful decision was made to 
abandon all the effort on this one particular product, it was not long 
before it became quite apparent that several other innovations of great 
promise were starting to flower. All this, however, took time. In the 
meanwhile, the company’s failure to live up to the hopes of many of 
those who had bought the shares caused the stock to drop to levels that 
were absurd in relation to its sales, its assets, or any type of normal earn-
ing power. Here seemed a classic example of zigging when the financial 
community was zagging. Therefore, three-year rule or no, I sizably fur-
ther increased my holdings and those of my clients, even though a few 
of those clients, influenced by the years of waiting and the negative per- 
formance, looked at this with a degree of apprehension. As so often hap- 
pens in situations of this sort, when the turn came, it came fast. As it 
became apparent that the betterment of earnings was not a one- or two-
year matter, but gave strong indications of being but the basis for years
of genuine growth, the stock continued to rise proportionately. 
AN EXPERIMENT WITH MARKET TIMING 
All this, however, gets me years ahead of my story, because back in the 
1930’s there were other things I also had to learn through trial and
error as my investment philosophy was gradually taking shape. In my 
casting around for ways to make money through common stocks, I 
began realizing that I might have a worthwhile by-product from my 
study of the Food Machinery Corporation. Enough of their business
was dependent on the fruit and vegetable canning industry so that in 
order to be reasonably sure I was right about my Food Machinery
purchases, I had inadvertently learned a good deal about what influ-
enced the fortunes of the fruit and vegetable canning companies 
themselves. This industry was highly cyclical because of both fluctuating 

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