=01&The 'new-era' doctrine - that 'good' stocks (or 'blue chips') where so=
und=20
investments regardless of how high the price paid for them -- was at botto=
m=20
only a means for rationalizing under the title of 'investment' the well-ni=
gh=20
universal capitulation to the gambling fever=01( Why did the investing pub=
lic=20
turn its attention from dividends, from asset values, and from earnings, t=
o=20
transfer it almost exclusively to the earnings trend? The answer was, first=
, =20
that the records of the past were proving an undependable guide to=20
investment; and secondly, that the rewards offered by the future had becom=
e=20
irresistibly alluring ... The notion that the desirability of a common sto=
ck=20
was entirely independent of its prices seems incredibly absurd. Yet the=20
new-era theory led directly to this thesis. If a stock was selling at 35=
=20
times the maximum recorded earnings, instead of 10 times its average=20
earnings, which was the pre-boom standard, the conclusion to be drawn was=
=20
not that the stock was too high but merely that the standard of value had=
=20
been raised. Instead of judging the market price by established standards =
of=20
value, the new-era based its standards of value on the market price.=018

- Benjamin Graham & David Dodd, Security Analysis, 1934.