Sharpe, William, 35, 57, 297, 299, 375,

400-401,404, 424/1 Sharpe-Lintner-Mossin form of CAPM,

400-404, 424/1 Sharpe-Treynor Index, 424/1 Sherif, Muzafer, 360-61 Shiller, Robert, 362-63, 392 Siegel, Jeremy J., 280, 281 silver, 242, 288 Simon, Herbert, 75, 215 Sinquefield, Rex, 228, 325, 327-29 Slovic, Paul, 77, 277 small capitalization stocks, 152, 302, 315,317-39 academic research on, 317-29 buy-and-hold strategy for, 330, 331 capitalization of, 319-20, 329, 331, 332

commissions for, 321, 322, 333,

337-38 competition of, 333 contrarian strategy for, 318, 325-27,

329-33 diversification and, 330, 331 dividend yields of, 327, 331 efficient market hypothesis (EMH)

and, 317, 318, 322, 396 Fortune chart on, 319, 320 illiquidity of, 320-21, 322, 323, 324,

326, 331,332, 335-36,339 indexes for, 63/i, 340-41 as IPOs, 326-27, 332-33 large capitalization stocks vs., 323-24,

326, 328-29, 332,434/i, 435/i low P/E strategy for, 317-18, 324-25,

329-33

market-makers for, 326/1, 336-37 mutual funds for, 63/i, 322, 327-29,

333, 339, 343 myths about, 317-25 on Nasdaq, 326, 333-39, 344 on NYSE, 318-21 "predictable reversal" for, 328-29 prices of, 319, 321-22, 323, 324, 325 price-to-book value ratio (P/BV) of,

327, 331-32 price-to-cash flow ratio (P/CF) of,

price-to-dividend ratio (P/D) of, 327, 331

retums on, 23, 325-33, 335-36, 339 risk of, 323, 330, 335 rules for, 331, 338 S&P 500 and, 325-29, 333 "small cap effect" of, 317, 326, 329-30, 333, 396

spread for, 321-24, 326/i, 333-39 statistics on, 318-27, 329, 330 "survivorship bias" in, 326, 332, 333

taxation and, 324

transaction costs for, 321, 322, 326,

330, 332, 333-39 small numbers, law of, 221-24, 235 Smith, Edgar Lawrence, 283-84, 292 Smith Barney, 106 software industry, 54-55, 364 South Sea Bubble, 206, 355, 361, 370,

Spain Fund, 210

Spiegel May Stem, 321

spread, bid/ask, 166, 321-24, 326/i,

333-39, 402 Spyglass, 366, 367

Standard & Poors 500, 23, 31, 52-53, 57, 58, 62, 63, 85, 90, 93, 98, 100, 153, 172, 176, 178, 191,203, 206-9, 213, 218, 267, 272, 325-29, 333, 340, 363-65 Stansky, Robert, 402 statistics:

charts for, 42-43, 45, 84, 217 computer analysis of, 34, 35,43-44,

95, 253-55 contrarian strategy and, 150-57 correlations in, 84, 380-81 on earnings surprises, 117, 386 on economic activity, 223-24 of efficient market hypothesis (EMH), 34, 35, 61-62, 374, 379, 380-83, 384, 392, 394 intuitive, 215-16, 227, 228 in investment errors, 215-16, 222-23,

227, 228

representative samples in, 222-23 on small capitalization stocks, 318-27, 329, 330 Stattman, Dennis, 151 Stem, Mitchell, 119 Stiglitz, Joseph, 378 stock market:

bear, 33, 154, 156-57, 160, 162, 166, 169, 186, 191, 200-201, 221-22, 239, 264, 303 bull, 15, 16, 17, 33,49, 166, 186, 202,

228, 235, 239, 284, 358, 369 casino analogy for, 27-28, 88, 136,

186, 187, 398 corrections in, 240-41, 248 fashions in, 234-35, 340, 359, 373 free-falling, 21 "go-go," 16, 366, 368-69

history of, 228-29, 235, 292-94, 315,

372, 373 indexes for, 63/i, 339-41 pitfalls of, 315, 316-44 postwar, 282, 283, 285-90, 295, 296,

307, 308 randomness in, 31, 85, 102-4 reaction of, 60-61, 62, 116, 141, 213,

223, 261-64 trading mechanisms in, 36, 117-18 two-tier, 146, 235 volatility of, 15-17, 35-36, 42-43,

56-57,60-61,228-29, 235,

239-40,282,296, 380-81 stock market crash (1929), 15-17, 71,

216-19, 234,283-85,324 stock market crash (1987), 32, 35, 63-64,

180, 216-19, 220, 221-22, 228,

239, 263, 264, 322n, 336. 353 stocks:

"best" vs. "worst," 20, 118-40, 142,

158, 162-67, 193-96, 200,214,

246-55, 280, 391-92 blue chip, 16, 72, 73, 165-66, 170,

221,281,284, 295,308,314,

318-19, 324 bonds compared with, 280-96,

305-15

"businessmans risk," 165-66

buying of, 106-7

common, 29, 146, 228-29, 234,

297-98, 307, 309 concept, 226, 235, 332, 363, 370 cyclical, 179-80 delisted, 321,340 discount on, 203, 205, 272, 338 fundamentals of, 16, 64, 174, 183,

217,218, 231,248, 249 growth, 20, 53-55, 101, 118, 141-45,

156, 178, 191, 232, 235, 239, 298,

303, 341,366 inflation and, 280-90, 291, 292-94,

295, 304, 305-15 middle grouping of, 123, 124, 125,

129, 135

multiples of, 101, 146, 147, 158, 177,

203, 207,212,213,252 options on, 367 out-of-favor, 139-59 over-the-counter, 146, 319, 326,

338 penny, 333 preferred, 305 premiums on, 364 prices of, see prices, stock quotes for, 335-36

secondary offerings of, 390, 392-393

selling of, 101, 105-7, 160,210-13, 262

splits of, 285-89, 393 taxation and, 290-92, 295, 305-15 valuation of, 16, 20, 43-56, 86, 94, 96, 101, 125, 131, 141, 142, 158-59, 162-63, 177, 179, 194, 246, 248, 254, 268

Stocks for the Long Run (Siegel), 280 Structure of Scientific Revolutions, The

(Kuhn), 395 Summers, Lawrence, 383 Summit Partners, 365 Sun Microsystems, 93 su rises, earnings, 117-36

event triggers in, 130-34,135, 247,

forecasts and, 90, 94,97,112,117, 118, 119-20, 125, 127, 128-29,

135, 136, 139, 140-41,391-92, 432n

investor psychology and, 118,135,

136, 139, 245-46, 247, 251 long-term effects of, 134-35 as market mechanism, 117-18 market performance and, 121, 122,

123, 126

negative, 119-24,126-29,130-32, 136, 177, 245-46, 247, 268, 391

positive, 123-26, 129, 130, 131, 132, 136,247, 391,432n

quarters of, 121-23, 124, 126, 132, 133

reinforcing events in, 130, 132-34,

135,247 selling and, 212 statistical basis of, 117, 386 "survivorship bias," 326, 332, 333

tactical asset allocation (TAA), 57 taxation:

bonds and, 273, 284, 290-92, 305-15, 404

brackets for, 156, 308, 44In ofcapital gains, 186, 187, 196, 403-4, 441n

cash flow and, 50, 53,163

income, 156, 169, 273, 290, 291-92,

313, 324, 403-4 portfolios and, 23, 169, 186 ofprofits,51,324 returns and, 284, 290-92, 295 risk and, 297, 305-15 small capitalization stocks and, 324

taxation (cont.)

stocks and, 290-92, 295, 305-15 write-offs for, 352 technical analysis, 43-47, 48, 55, 56, 57,

59, 373, 397 technology industry, 54, 55-56, 58-59,

93,114, 200, 362, 364-69, 370 Telex, 368

Templeton, John, 84, 212, 239, 382, 384 Thaler, Richard, 256 3Com, 55, 93 Todd, Michael, 70

transaction costs, 57, 62, 166, 168, 186, 196, 321,322, 326, 330, 332, 333-39

treasury bills, 28-29, 273, 278, 280-87, 290-95, 297, 301, 304, 306-15, 401,403,440n

trend lines, 42, 54

Trump, Donald, 105-6, 353

trustees, 303-4

T-test, 381,434

tulip bulbs, 234, 240, 355, 370, 371 Tversky, Amos, 108-9, 110, 216, 218, 220, 222, 224, 232

underwriting, 106, 210, 364, 367 unemployment, 223, 289, 353, 378 Unilever, 209 United Dyewood, 321 University Computing, 16, 371 University of Chicago, 150, 153, 376 USA Today, 366-67 U.S. Surgical, 130-31 UUNet, 366, 368

valuation:

over-, 20, 52, 96, 158, 163, 194, 246,

248, 254 under-, 20, 86, 142, 162, 177, 179, 194, 248, 268 value, 78

assessment of, 233-34 asset, 52, 293

crisis investing and, 261-62, 271-75, 276

dollar vs. real, 294

hidden, 60

intrinsic, 101

lifelines for, 271-75

price vs., 49, 230-31, 393-94, 446n

property, 352 replacement, 53

standards of, 261-62, 352, 354, 355,

356, 364 total, 312

value investing, 49, 153, 154-57, 164,

175, 178, 191,295 Value Line Investment Survey, 98, 203,

209, 340-4l,349n, 384-85 Value Line Mutual Fund Service, 204 Value Line New Issue Survey, 362 Van Gogh, Vincent, 242 Vanguard Group, 31, 63, 205, 210 Vanguard International Equity Index, 210 Vartan, Vartanig G., 42 Vickrey, William, 379 visibility, 95, 100, 101, 141-45, 158, 257

Walesa, Lech, 40

Wall Street Journal, 45, 85, 89, 203, 205,

233, 323n, 398 Wal-Mart, 53-54 Watson, Thomas J., 54, 71 Weingarten, Henry, 44 Weinstein, Stan, 222 Weir, Johannes, 316 Wells Fargo, 63 Westem Transmedia, 336 Westem Union, 71 Westinghouse Electric, 181-82 Whitman, Walt, 69 Wilde, Oscar, 67 Williams, John Burr, 101 Winchell, Walter, 70 Windsor Fund, 384 Winstanley, William, 69 witch hunting, 316-17, 357 Woodard, Nelson, 119 Woodsum, Stephen, 365 World War I, 238, 320 World War II, 238, 293,324 Wright, Orville and Wilbur, 68

Yahoo, 366, 369 Yardini, Ed, 16

Zacks, 90

Zeckhauser, Richard, 104 zero-coupon bonds, 273 Zola, Emile, 70 Zoll Medical, 93