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Accounting for Value Page 211 (231 of 528)
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Notes
1. Return to Fundamentals
1. There are at least 310 million of you in the world who own equity shares
directly, 173 million in countries with developed stock markets, and 137 mil-
lion in countries with emerging markets. In addition, at least 503 million of
you own shares indirectly through pension fund holdings. As reported in Paul
A. Grout, William L. Megginson, and Ania Zalewska, “One Half- Billion
Shareholders and Counting— Determinants of Individual Share Own ership
Around the World” (2009), at http:// ssrn .com/ abstract =1457482 .
2. The S&P 500 index subsequently dropped from 1499 at the beginning of
2000 to 815 by mid-2002. By mid-2002, Cisco Systems traded at $14, down
from $77 in early 2000. Dell Computer dropped from $50 in 2000 to $26 by
mid-2002. For an analysis of the 1990s bubble, see Carl Haacke, Frenzy: Bubbles,
Busts, and How to Come Out Ahead (New York: Palgrave Macmillan, 2004).
3. By the end of 1989, the Nikkei 225 index of Japa nese stocks stood at
38,957, 238 percent above its level fi 2001, ve years before. Twelve years later in
the Nikkei 225 fell below 10,000, for a loss of over 75 percent from the 1989
high. The “Nifty- Fifty” stocks refer to the so- called glamour stocks of the
early 1970s: the likes of Coca- Cola, Johnson & Johnson, Burroughs, Digital
Equipment, IBM, Polaroid, Eastman Kodak, and Xerox. The S&P 500 P/E
ratio declined from 18.4 at the end of 1972 to 7.7 at the end of 1974, and was at
7.3 at the end of that de cade.
4. See Benjamin Graham, The Intelligent Investor, rev. ed. (New York:
Harper & Row, 1973). The fi 1949, and a reprint in rst edition was published in
2005 with a preface by Warren E. Buffett. The other classic, with considerably
more on technique, is Benjamin Graham, David L. Dodd, and Sidney Cottle,
Security Analysis: Principles and Technique, 4th ed. (New York: McGraw- Hill,
1962). The fi rst edition, authored by Graham and Dodd, was published in