In 'The Intelligent Investor', the comparison between the stock values of IPOs and medium-sized enterprises with a long history is used to illustrate the risks associated with investing in IPOs, particularly during bull markets. The author, Benjamin Graham, warns that IPOs often have higher built-in commissions and are usually sold near the peak of a bull market. This can lead to a frenzy for subsequent IPOs, with even small and nondescript companies having stock values higher than established medium-sized enterprises. This is a clear sign of the end of a bull market, as the prices of these new stocks often crash to new lows. Therefore, Graham advises investors to avoid such costly speculation.

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The Intelligent Investor

This book will not teach you how to beat the market. However, it will teach you how to reduce risk, protect your capital from loss and reliably genera...

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Graham warns investors to avoid purchasing Initial Public Offerings (IPOs), particularly in bull markets — for two reasons. First, IPOs offer a higher built-in commission, leading to a harder sell. Second, new issues are nearly always sold near the peak of a bull market. The initial IPOs in a rising market lead to profits fuelling a frenzy for subsequent IPOs. A clear sign of the end of a bull market is when IPOs of small and nondescript companies have stock values higher than medium-sized enterprises with a long history. Since the prices of these new stocks usually crash to new lows, Graham warns investors to stay away from this kind of costly speculation.

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'The Intelligent Investor' by Benjamin Graham has significantly influenced corporate investment strategies. The book emphasizes the importance of value investing, a strategy of buying stocks at less than their intrinsic value. It also warns against the risks of investing in Initial Public Offerings (IPOs), especially during bull markets, due to their higher built-in commission and tendency to be sold at the peak of the market. These principles have guided many corporations in their investment decisions, promoting a more cautious and long-term approach to investing.

'The Intelligent Investor' challenges the existing paradigms about investing in IPOs by warning investors to avoid them, especially during bull markets. The book argues that IPOs often have higher built-in commissions, leading to a harder sell. Additionally, new issues are typically sold near the peak of a bull market, which can lead to a frenzy for subsequent IPOs. This often results in the prices of these new stocks crashing to new lows. Therefore, the book advises investors to stay away from this kind of costly speculation.

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