Good managements produce a good average market price, and bad managements produce bad market prices.

Market Price Fluctuations:  An Added Consideration

Something should be said about the significance of average market prices as a measure of managerial competence. 

• The shareholder judges whether his own investment has been successful in terms both of dividends received and of the long-range trend of the average market value. 
• The same criteria should logically be applied in testing the effectiveness of a company’s management and the soundness of its attitude toward the owners of the business.

This statement may sound like a truism, but it needs to be emphasized.

• For as yet there is no accepted technique or approach by which management is brought to the bar of market opinion. 

On the contrary, managements have always insisted that they have no responsibility of any kind for what happens to the market value of their shares.

• It is true, of course, that they are not accountable for those fluctuations in price which, as we have been insisting, bear no relationship to underlying conditions and values. 
• But it is only the lack of alertness and intelligence among the rank and file of shareholders that permits this immunity to extend to the entire realm of market quotations, including the permanent establishment of a depreciated and unsatisfactory price level. 

Good managements produce a good average market price, and bad managements produce bad market prices.

The investor with a portfolio of sound stocks should expect their prices to fluctuate

The investor with a portfolio of sound stocks should expect their prices to fluctuate and should

• neither be concerned by sizable declines 
• nor become excited by sizable advances. 

He should always remember that market quotations are there for his convenience,

• either to be taken advantage of or 
• to be ignored. 

He should never 

• buy a stock because it has gone up or 
• sell one because it has gone down. 

He would not be far wrong if this motto read more simply: “Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.”

Activities that emphasize price movements first and underlying values second tend to be self-neutralizing and self-defeating over the years.

Aside from forecasting the movements of the general market, much effort and ability are directed on Wall Street toward selecting stocks or industrial groups that in matter of price will “do better” than the rest over a fairly short period in the future. 

Logical as this endeavor may seem, we do not believe it is suited to the needs or temperament of the true investor—particularly since he would be competing with a large number of stock-market traders and firstclass financial analysts who are trying to do the same thing.

As  in all other activities that emphasize price movements first and underlying values second, the work of many intelligent minds constantly engaged in this field tends to be self-neutralizing and selfdefeating over the years.

When to Buy? When Not to Buy? It is far from certain that the typical investor should regularly hold off buying until low market levels appear.

It is far from certain that the typical investor should regularly hold off buying until low market levels appear, because

• this may involve a long wait, 
• very likely the loss of income, and 
• the possible missing of investment opportunities. 

On the whole it may be better for the investor to do his stock buying whenever he has money to put in stocks, except when the general market level is much higher than can be justified by well-established standards of value. 

If he wants to be shrewd he can look for the ever-present bargain opportunities in individual securities.

It is far from certain that the typical investor should regularly hold off buying until low market levels appear

It is far from certain that the typical investor should regularly hold off buying until low market levels appear, because

• this may involve a long wait, 
• very likely the loss of income, and 
• the possible missing of investment opportunities. 

On the whole it may be better for the investor to do his stock buying whenever he has money to put in stocks, except when the general market level is much higher than can be justified by well-established standards of value. 

If he wants to be shrewd he can look for the ever-present bargain opportunities in individual securities.

The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements.

The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements.  

The speculator’s primary interest lies in anticipating and profiting from market fluctuations. 

The investor’s primary interest lies in acquiring and holding suitable securities at suitable prices.

Market movements are important to him in a practical sense, because they alternately create 

• low price levels at which he would be wise to buy and 
• high price levels at which he certainly should refrain from buying and probably would be wise to sell.

Market price fluctuations have only one significant meaning for the true investor.

Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity 

• to buy wisely when prices fall sharply and 
• to sell wisely when they advance a great deal. 

At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies.

Do Not Overpay to Own a Company with Brilliant Prospects; Use the Vagaries of the Market to Play the Master Game of Buying Low and Selling High

Growth Stock Paradox: The more successful the company, the greater are likely to be the fluctuations in the price of its shares.

This leads us to a conclusion of practical importance to the conservative investor in common stocks.

• If he is to pay some special attention to the selection of his portfolio, it might be best for him to concentrate on issues selling at a reasonably close approximation to their tangible-asset value—say, at not more than one-third above that figure. 
• Purchases made at such  levels, or lower, may with logic be regarded as related to the company’s balance sheet, and as having a justification or support independent of the fluctuating market prices. 
• The premium over book value that may be involved can be considered as a kind of extra fee paid for the advantage of stock-exchange listing and the marketability that goes with it.

A caution is needed here.

• A stock does not become a sound investment merely because it can be bought at close to its asset value. 
• The investor should demand, in addition, a satisfactory ratio of earnings to price, a sufficiently strong financial position, and the prospect that its earnings will at least be maintained over the years. 

This may appear like demanding a lot from a modestly priced stock, but the prescription is not hard to fill under all but dangerously high market conditions. 


Once the investor is willing to forgo brilliant prospects—i.e., better than average expected growth—he will have no difficulty in finding a wide selection of issues meeting these criteria.



More than half of the DJIA issues met our asset-value criterion at the end of 1970.

• The most widely held investment of all—American Tel. & Tel.—actually sells below its tangible-asset value as we write. 
• Most of the light-and power shares, in addition to their other advantages, are now (early 1972) available at prices reasonably close to their asset values. 

The investor with a stock portfolio having such book values behind it can take a much more independent and detached view of stock-market fluctuations than those who have paid high multipliers of both earnings and tangible assets.


As long as the earning power of his holdings remains satisfactory, he can give as little attention as he pleases to the vagaries of the stock market. 

More than that, at times he can use these vagaries to play the master game of buying low and selling high.

Explanations for the Erratic Price Behaviour of some of the Most Successful and Impressive Enterprises

Growth Stock Paradox: The more successful the company, the greater are likely to be the fluctuations in the price of its shares.

The argument made above should explain the often erratic price behavior of our most successful and impressive enterprises. 

• Our favorite example is the monarch of them all—International Business Machines. The price of its shares fell from 607 to 300 in seven months in 1962–63; after two splits its price fell from 387 to 219 in 1970. 
• Similarly, Xerox—an even more impressive earnings gainer in recent decades—fell from 171 to 87 in 1962–63, and from 116 to 65 in 1970. 

These striking losses 

• did not indicate any doubt about the future long-term growth of IBM or Xerox; 
• they reflected instead a lack of confidence in the premium valuation that the stock market itself had placed on these excellent prospects.

Growth Stock Paradox: The more successful the company, the greater are likely to be the fluctuations in the price of its shares.

The development of the stock market in recent decades has made the typical investor

• more dependent on the course of price quotations and 
• less free than formerly to consider himself merely a business owner. 

The reason is that the successful enterprises in which he is likely to concentrate his holdings

• sell almost constantly at prices well above their net asset value (or book value, or  “balance-sheet value”). 
• In paying these market premiums the investor gives precious hostages to fortune, for he must depend on the stock market itself to validate his commitments.†

This is a factor of prime importance in present-day investing, and it has received less attention than it deserves. The whole structure of stock-market quotations contains a built-in contradiction. 

• The better a company’s record and prospects, the less relationship the price of its shares will have to their book value. 
• But the greater the premium above book value, the less certain the basis of determining its intrinsic value—i.e., the more this “value” will depend on the changing moods and measurements of the stock market.  

Thus we reach the final paradox, that the more successful the company, the greater are likely to be the fluctuations in the price of its shares. 

• This really means that, in a very real sense, the better the quality of a common stock, the more speculative it is likely to be—at least as compared with the unspectacular middle-grade issues.*  
• (What we have said applies to a comparison of the leading growth companies with the bulk of well-established concerns; we exclude from our purview here those issues which are highly speculative because the businesses themselves are speculative.)

† Net asset value, book value, balance-sheet value, and tangible-asset value are all synonyms for net worth, or the total value of a company’s physical and financial assets minus all its liabilities. It can be calculated using the balance sheets in a company’s annual and quarterly reports; from total shareholders’ equity, subtract all “soft” assets such as goodwill, trademarks, and other intangibles. Divide by the fully diluted number of shares outstanding to arrive at book value per share.



* Graham’s use of the word “paradox” is probably an allusion to a classic article by David Durand, “Growth Stocks and the Petersburg Paradox,” The Journal of Finance, vol. XII, no. 3, September, 1957, pp. 348–363, which compares investing in high-priced growth stocks to betting on a series of coin flips in which the payoff escalates with each flip of the coin. Durand points out that if a growth stock could continue to grow at a high rate for an indefinite period of time, an investor should (in theory) be willing to pay an infinite price for its shares. Why, then, has no stock ever sold for a price of infinity dollars per share? Because the higher the assumed future growth rate, and the longer the time period over which it is expected, the wider the margin for error grows, and the higher the cost of even a tiny miscalculation becomes. 


Ref:  Intelligent Investor by Benjamin Graham

Investor of marketable shares has a double status, with the privilege of taking advantage of either at his choice.

The impact of market fluctuations upon the investor’s true situation may be considered also from the standpoint of the shareholder as the part owner of various businesses.

The holder of marketable shares actually has a double status, and with it the privilege of taking advantage of either at his choice. 

1.  On the one hand his position is analogous to that of a minority shareholder or silent partner in a private business.

• Here his results are entirely dependent on the profits of the enterprise or on a change in the underlying value of its assets. 
• He would usually determine the value of such a private-business interest by calculating his share of the net worth as shown in the most recent balance sheet. 

2.  On the other hand, the common-stock investor holds a piece of paper, an engraved stock certificate.

• This stock certificate can be sold in a matter of minutes at a price which varies from moment to moment—when the market is open, that is—and often is far removed from the balance sheet value.

Substantial rise in the market: Practical questions and psychological problems confronting the investors

A serious investor is not likely to believe that the day-to-day or even month-to-month fluctuations of the stock market make him richer or poorer.


But what about the longer-term and wider changes in the stock market? Here practical questions present themselves, and the psychological problems are likely to grow complicated.

A substantial rise in the market is 

• at once a legitimate reason for satisfaction and 
• a cause for prudent concern, 
• but it may also bring a strong temptation toward imprudent action.

Your shares have advanced, good!  You are richer than you were, good!

• But has the price risen too high, and should you think of selling? 
• Or should you kick yourself for not having bought more shares when the level was lower? 
• Or— worst thought of all—should you now give way to the bull-market atmosphere, become infected with the enthusiasm, the overconfidence and the greed of the great public (of which, after all, you are a part), and make larger and dangerous commitments? 

Presented thus in print, the answer to the last question is a self-evident no, but even the intelligent investor is likely to need considerable will power to keep from following the crowd.

It is for these reasons of human nature, even more than by calculation of financial gain or loss, that we favor some kind of mechanical method for varying the proportion of bonds to stocks in the investor’s portfolio.

• The chief advantage, perhaps, is that such a formula will give him something to do. 
• As the market advances he will from time to time make sales out of his stockholdings, putting the proceeds into bonds; as it declines he will reverse the procedure. 
• These activities will provide some outlet for his otherwise too-pent-up energies. 
• If he is the right kind of investor he will take added satisfaction from the thought that his operations are exactly opposite from those of the crowd.*

* For today’s investor, the ideal strategy for pursuing this “formula” is rebalancing.

Every investor who owns common stocks must expect to see them fluctuate in value over the years.

Market Fluctuations of the Investor’s Portfolio

Every investor who owns common stocks must expect to see them fluctuate in value over the years. 

The behavior of the DJIA since our last edition was written in 1964 probably reflects pretty well what has happened to the stock portfolio of a conservative investor who limited his stock holdings to those of large, prominent, and conservatively financed corporations.

• The overall value advanced from an average level of about 890 to a high of 995 in 1966 (and 985 again in 1968), fell to 631 in 1970, and made an almost full recovery to 940 in early 1971. 
• (Since the individual issues set their high and low marks at different times, the fluctuations in the Dow Jones group as a whole are less severe than those in the separate components.) 
• We have traced through the price fluctuations of other types of diversified and conservative common-stock portfolios and we find that the overall results are not likely to be markedly different from the above. 
• In general, the shares of second-line companies* fluctuate more widely than the major ones, but this does not necessarily mean that a group of well established but smaller companies will make a poorer showing over a fairly long period. 

In any case the investor may as well resign himself in advance to the probability rather than the mere possibility that most of his holdings will advance, say, 50% or more from their low point and decline the equivalent one-third or more from their high point at various periods in the next five years.†




* Today’s equivalent of what Graham calls “second-line companies” would be any of the thousands of stocks not included in the Standard & Poor’s 500-stock index. A regularly revised list of the 500 stocks in the S & P index is available at www.standardandpoors.com.

† Note carefully what Graham is saying here. It is not just possible, but probable, that most of the stocks you own will gain at least 50% from their lowest price and lose at least 33% from their highest price—regardless of which stocks you own or whether the market as a whole goes up or down. 

• If you can’t live with that—or you think your portfolio is somehow magically exempt from it—then you are not yet entitled to call yourself an investor. 
• (Graham refers to a 33% decline as the “equivalent one-third” because a 50% gain takes a $10 stock to $15. From $15, a 33% loss [or $5 drop] takes it right back to $10, where it started.

Ref:  Intelligent Investor by Benjamin Graham

Various methods of taking advantage of the stock market’s cycles: "Formula Investment Plans"

Formula Plans

In the early years of the stock-market rise that began in 1949–50 considerable interest was attracted to various methods of taking advantage of the stock market’s cycles. These have been known as “formula investment plans.” 

• The essence of all such plans—except the simple case of dollar averaging—is that the investor automatically does  some selling of common stocks when the market advances substantially. 
• In many of them a very large rise in the market level would result in the sale of all common-stock holdings; others provided for retention of a minor proportion of equities under all circumstances.

This approach had the double appeal of sounding logical (and conservative) and of showing excellent results when applied retrospectively to the stock market over many years in the past. Unfortunately, its vogue grew greatest at the very time when it was destined to work least well.

• Many of the “formula planners” found themselves entirely or nearly out of the stock market at some level in the middle 1950s. 
• True, they had realized excellent profits, but in a broad sense the market “ran away” from them thereafter, an their formulas gave them little opportunity to buy back a commonstock position.*

There is a similarity between the experience of those adopting the formula-investing approach in the early 1950s and those who embraced the purely mechanical version of the Dow theory some 20 years earlier.

• In both cases the advent of popularity marked almost the exact moment when the system ceased to work well. 
• We have had a like discomfiting experience with our own “central value method” of determining indicated buying and selling levels of the Dow Jones Industrial Average. 
• The moral seems to be that any approach to moneymaking in the stock market which can be easily described and followed by a lot of people is by its terms too simple and too easy to last.† 
• Spinoza’s concluding remark applies to Wall Street as well as to philosophy: “All things excellent are as difficult as they are rare.”

* Many of these “formula planners” would have sold all their stocks at the  end of 1954, after the U.S. stock market rose 52.6%, the second-highest  yearly return then on record. Over the next five years, these market-timers would likely have stood on the sidelines as stocks doubled.

† Easy ways to make money in the stock market fade for two reasons: 

• the 
  natural tendency of trends to reverse over time, or “regress to the mean,” and,
• the rapid adoption of the stock-picking scheme by large numbers of people, who pile in and spoil all the fun of those who got there first. 

(Note that, in referring to his “discomfiting experience,” Graham is—as always— honest in admitting his own failures.) 

Ref:  Chap 8 Intelligent Investor by Benjamin Graham

Can the average investors benefit by buying AFTER each major decline and selling out AFTER each major advance?

Buy-Low–Sell-High Approach

We are convinced that the average investor cannot deal successfully with price movements by endeavoring to forecast them. Can he benefit from them after they have taken place—i.e., by buying after each major decline and selling out after each major advance?

The fluctuations of the market over a period of many years prior to 1950 lent considerable encouragement to that idea.

• In fact, a classic definition of a “shrewd investor” was “one who bought in a bear market when everyone else was selling, and sold out in a bull market when everyone else was buying.” 
• If we examine the fluctuations of the Standard & Poor’s composite index between 1900 and 1970, we can readily see why this viewpoint appeared valid until fairly recent years.

Between 1897 and 1949 there were ten complete market cycles, running from bear-market low to bull-market high and back to bear-market low.

• Six of these took no longer than four years, four ran for six or seven years, and one—the famous “new-era” cycle of 1921–1932—lasted eleven years. 
• The percentage of advance from the lows to highs ranged from 44% to 500%, with most between about 50% and 100%. 
• The percentage of subsequent declines ranged from 24% to 89%, with most found between 40% and 50%. (It should be remembered that a decline of 50% fully offsets a preceding advance of 100%.)

Nearly all the bull markets had a number of well-defined characteristics in common, such as 

• (1) a historically high price level, 
• (2) high price/earnings ratios, 
• (3) low dividend yields as against bond yields, 
• (4) much speculation on margin, and 
• (5) many offerings of new common-stock issues of poor quality. 

Thus to the student of stock-market history it appeared that the intelligent investor should have been able 

• to identify the recurrent bear and bull markets,
• to buy in the former and sell in the latter, and 
• to do so for the most part at reasonably short intervals of time. 

Various methods were developed for determining buying and selling levels of the general market, based on either 

• value factors or 
• percentage movements of prices or 
• both. 

But we must point out that even prior to the unprecedented bull market that began in 1949, there were sufficient variations in the successive market cycles to complicate and sometimes frustrate the desirable process of buying low and selling high. 

• The most notable of these departures, of course, was the great bull market of the late 1920s, which threw all calculations badly out of gear.* 
• Even in 1949, therefore, it was by no means a certainty that the investor could base his financial policies and procedures mainly on the endeavor to buy at low levels in bear markets and to sell out at high levels in bull markets. 

It turned out, in the sequel, that the opposite was true. 

• The market’s behavior in the past 20 years has not followed the former pattern, nor obeyed what once were well-established danger signals, nor permitted its successful exploitation by applying old rules for buying low and selling high. 
• Whether the old, fairly regular bull-and-bear-market pattern will eventually return we do not know. 
• But it seems unrealistic to us for the investor to endeavor to base his present policy on the classic formula—i.e., to wait for demonstrable bear-market levels before buying  any common stocks. 

Our recommended policy has, however, 

• made provision for changes in the  proportion of common stocks to bonds in the portfolio, 
• if the investor chooses to do so, 
• according as the level  of stock prices appears less or more attractive by value standards.*

Dow Theory for Timing Purchases and Sales - As their acceptance increases, their reliability tends to diminish

In this respect the famous Dow theory for timing purchases and sales has had an unusual history.* Briefly, this technique takes its signal to buy from a special kind of “breakthrough” of the stock averages on the up side, and its selling signal from a similar breakthrough on the down side. 

• The calculated—not necessarily actual—results of using this method showed an almost unbroken series of profits in operations from 1897 to the early 1960s. 
• On the basis of this presentation the practical value of the Dow theory would have appeared firmly established; the doubt, if any, would apply to the dependability of this published “record” as a picture of what a Dow theorist would actually have done in the market.

A closer study of the figures indicates that the quality of the results shown by the Dow theory changed radically after 1938—a few years after the theory had begun to be taken seriously on Wall Street.

• Its spectacular achievement had been in giving a sell signal, at 306, about a month before the 1929 crash and in keeping its followers out of the long bear market until things had pretty well righted themselves, at 84, in 1933. 
• But from 1938 on the Dow theory operated mainly by taking its practitioners out at a pretty good price but then putting them back in again at a higher price.  
• For nearly 30 years thereafter, one would have done appreciably better by just buying and holding the DJIA.

In our view, based on much study of this problem, the change in the Dow-theory results is not accidental. It demonstrates an inherent characteristic of forecasting and trading formulas in the fields of business and finance. 

• Those formulas that gain adherents and importance do so because they have worked well over a period, or sometimes merely because they have been plausibly adapted to the statistical record of the past. 

But as their acceptance increases, their reliability tends to diminish. This happens for two reasons:

• First, the passage of time brings new conditions which the old formula no longer fits. 
• Second, in stock-market affairs the popularity of a trading theory has itself an influence on the market’s behavior which detracts in the long run from its profit-making possibilities. 
• (The popularity of something like the Dow theory may seem to create its own vindication, since it would make the market advance or decline by the very action of its followers when a buying or selling signal is given. A “stampede” of this kind is, of course, much more of a danger than an advantage to the public trader.)

Timing is of no real value to the investor unless it coincides with pricing

The farther one gets from Wall Street, the more skepticism one will find, we believe, as to the pretensions of stock-market forecasting or timing. 

• The investor can scarcely take seriously the innumerable predictions which appear almost daily and are his for the asking. 
• Yet in many cases he pays attention to them and even acts upon them. 

Why? Because he has been persuaded that

•  it is important for him to form some opinion of the future course of the stock market, and 
• because he feels that the brokerage or service forecast is at least more dependable than his own.*

A great deal of brain power goes into this field, and undoubtedly some people can make money by being good stockmarket analysts. But it is absurd to think that the general public can ever make money out of market forecasts. 

• For who will buy when the general public, at a given signal, rushes to sell out at a profit? 
• If you, the reader, expect to get rich over the years by following some system or leadership in market forecasting, you must be expecting to try to do what countless others are aiming at, and to be able to do it better than your numerous competitors in the market. 
• There is no basis either in logic or in experience for assuming that any typical or average investor can anticipate market movements more successfully than the general public, of which he is himself a part.

There is one aspect of the “timing” philosophy which seems to have escaped everyone’s notice.

• Timing is of great psychological importance to the speculator because he wants to make his profit in a hurry. 
• The idea of waiting a year before his stock moves up is repugnant to him. 

But a waiting period, as such, is of no consequence to the investor. 

• What advantage is there to him in having his money uninvested until he receives some (presumably) trustworthy signal that the time has come to buy? 
• He enjoys an advantage only if by  waiting he succeeds in buying later at a sufficiently lower price to offset his loss of dividend income. 
• What this means is that timing is of no real value to the investor unless it coincides with pricing—that is, unless it enables him to repurchase his shares at substantially under his previous selling price.

Two ways to profit from the market swings: Timing or Pricing

Since common stocks, even of investment grade, are subject to recurrent and wide fluctuations in their prices, the intelligent investor should be interested in the possibilities of profiting from these pendulum swings. There are two possible ways by which  he may try to do this:

• the way of timing and 
• the way of  pricing.

By timing we mean the endeavor to anticipate the action of the stock market—

• to buy or hold when the future course is deemed to be upward, 
• to sell or refrain from buying when the course is downward. 

By pricing we mean the endeavor

• to buy stocks when they are quoted below their fair value and 
• to sell them when they rise above such value. 

A less ambitious form of pricing is  the simple effort to make sure that when you buy you do not  pay too much for your stocks. 

• This may suffice for the defensive investor, whose emphasis is on long-pull holding; but as  such it represents an essential minimum of attention to market levels.

We are convinced that the intelligent investor can derive satisfactory results from pricing of either type. 

We are equally sure that if he places his emphasis on timing, in the sense of forecasting, he will end up as a speculator and with a speculator’s financial results. 

This distinction may seem rather tenuous to the layman, and it is not commonly accepted on Wall Street. As a matter of business practice, or perhaps of thoroughgoing conviction, the stock brokers and the investment services seem wedded to the principle that both investors and speculators in common stocks should devote careful attention to market forecasts.

The Investor and Market Fluctuations

To the extent that the investor’s funds are placed

• in high-grade bonds of relatively short maturity—say, of seven years or less—he will not be affected significantly by changes in market prices and need not take them into account. 
• (This applies also to his holdings of U.S. savings bonds, which he can always turn in at his cost price or more.) 
• His longer-term bonds may have relatively wide price swings during their lifetimes, and 
• his common-stock portfolio is almost certain to fluctuate in value over any period of several years.

The investor should know about these possibilities and should be prepared for them both financially and psychologically.  He will want to benefit from changes in market levels—

• certainly through an advance in the value of his stock holdings as time goes on, and 
• perhaps also by making purchases and sales at advantageous prices. 

This interest on his part is inevitable, and legitimate enough. But it involves the very real danger that it will lead him into speculative attitudes and activities. 

• It is easy for us to tell you not to speculate; the hard thing will be for you to follow this advice. 
• Let us repeat what we said at the outset: If you want to speculate do so with your eyes open, knowing that you will probably lose money in the end; be sure to limit the amount at risk and to separate it completely from your investment program.

What can the past record of the market actions promises the investor—

• in either the form of long-term appreciation of a portfolio held relatively unchanged through successive rises and declines, 
• or in the possibilities of buying near bear-market lows and selling not too far below bull-market highs?

Ref:  Intelligent Investor by Benjamin Graham.

Public Bank Berhad (At a Glance)

Public Bank Berhad 2011 2010               Change Operating revenue 12756.360 11035.597 15.6% Interest income 4974.931 4597.420 8.2% Net income (Islamic banking) 868.342 781.288 11.1% 5843.273 5378.708 8.6% Net fee & commission income 1118.909 1031.770 8.4% Net income 7408.570 6838.500 8.3% Operating profit  5199.886 4738.265 9.7% Allowance for impairment -594.061 -659.566 -9.9% Profit before tax and zakat 4610.633 4086.197 12.8% Profit for the year 3524.024 3099.077 13.7% Earning per RM 1 share (sen) 99.500 87.200 14.1% Total assets 249410.982 226328.976 10.2% Total equity 15560.706 13685.088 13.7% Net assets per share 4.24 3.72 14.0% Net profit margin 27.63% 28.08% -1.6% Asset turnover 0.051 0.049 4.9% Financial leverage 16.0 16.5 -3.1% ROA 1.41% 1.37% 3.2% ROE 22.65% 22.65% 0.0% Share Information and Valuation Share Information Per share (sen) Basic earnings 99.5 Diluted earnings 99.5 Net dividend -Cash dividend  48.0 sen -Share dividend  - Net assets 424.4 Share price as at 31.12.2011 (RM) - Local 13.38 - Foreign 13.20 Market capitalisation (RM Million)  47,066 Valuation (Local Share) Net dividend yield (%)  3.6 Net dividend yield (including share dividend) [%] 3.6 Dividend payout ratio (%) 48.3 Dividend payout ratio (including share dividend) [%] 48.3 Price to earnings multiple (times)  13.4 Price to book multiple (times)  3.2 Historical EPS & Net Dividends (sen) 2011 EPS  99.5 Cash Dividend  48.0 Share Dividend - 2010  EPS  87.2 Cash Dividend 45.5 Share Dividend - 2009 EPS  73.3 Cash Dividend  41.3 - Share Dividend  1 for 68 2008 EPS  76.9 Cash Dividend 41.0 Share Dividend  1 for 35 2007 EPS  63.3 Cash  Dividend  55.3 Share Dividend -

Recent Financial Results

Announcement Date		Financial Yr. End		Qtr	Period End		Revenue RM '000		Profit/Lost RM'000		EPS		Amended
30-Jan-12		31-Dec-11		4	31-Dec-11		3,321,633		886,054		25.04		-
17-Oct-11		31-Dec-11		3	30-Sep-11		3,272,466		907,897		25.66		-
25-Jul-11		31-Dec-11		2	30-Jun-11		3,170,654		891,444		25.14		-
18-Apr-11		31-Dec-11		1	31-Mar-11		2,991,607		838,629		23.63		Amended