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Quotes of the Week

October 25, 1999

Quarterly earnings announcements have been a well-choreographed waltz for some time. As investors relied more on short-term earrnings forecasts to help them value shares, astute executives learned to manage expectations for their companies' performance down to a level that they could then breeze past.
Gretchen Morgenson in The Earnings Waltz: Is the Music Stopping? RR from The New York Times (10/24/99)

Earnings are only a means to an end, and the means should not be mistaken for the end. Therefore we must say that a stock derives its value from its dividends, not its earnings. In short, a stock is worth only what you can get out of it. Even so spoke the old farmer to his son:

A cow for her milk,
A hen for her eggs,
And a stock, by heck
For her dividends.

An orchard for fruit
Bees for their honey,
And stocks, besides,
For their dividends.

The old man knew where milk and honey came from, but he made no such mistake as to tell his son to buy a cow for her cud or bees for their buzz.

John Burr Williams in The Theory of Investment Value (Also in The Investors Anthology)

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