Portfolio Policy for the Enterprising Investor

Negative Approach

1. Avoid ordinary corporate bonds as long as the best grade issues yield little more than his US Savings Bonds ("risk free" bonds).
2. Leave high-grade preferred stocks to corporate buyers (they enjoy a tax benefit).
3. Avoid inferior types of bonds and preferred stocks unless they can be bought at a bargain levels (at least 30% under par).
4. Let someone else buy foreign government bond issues, even though the yield may be attractive.
5. Be wary of all kinds of new issues (new bonds, new preferred stocks and new stocks), including convertible bonds and preferreds that seem quite tempting.
6. Be wary of common stocks with excellent earnings confined to the recent past.

The Positive Approach (4 Approaches)

1. Buying in low markets and selling in high markets.
2. Buying carefully chosen "growth stocks".
3. Buying bargain issues of various types.
4. Buying into "special situations".

The Intelligent Investor

Benjamin Graham