Benjamin Graham was a noted economist who formulated his theories on stock market investment in response to the great stock market collapse of 1929. Specifically, he viewed the collapse of the stock market as a result of people following market trends too closely. In fact, he often used a character called "Mr. Market" in his works to demonstrate how foolish it was to simply fall into line with market trends. If a person called "Mr. Market" appeared on your doorstep each day and offered random prices for various stocks, you would not accept every offer he made, since some of those offers would be utterly ridiculous. Instead, Benjamin Graham argued, a person who wishes to do well in the stock market should seek out stocks that are being sold for less than their value should be in a rational market. This was something he called value investing. The problem, of course, lies in figuring out what a stock's ideal value should be. To do this, Graham believed that before buying a stock, an investor should analyze that company's assets and liabilities to determine its true financial situation. If that situation looked good, and seemed as if it should allow the company to command a higher stock price than it was actually charging, then it was a good buy. When it came to determining which stocks were below ideal market value, Benjamin Graham emphasized studying those aspects of a company that were easily quantifiable. In his original version of the theory of value investing, he simply looked for stocks that were trading for slightly less than their so-called "book value." A company's book value is how much net worth it has according to its accounting books, which list all of its liabilities, expenses, revenue, and assets. Most economists later viewed this as a flawed approach, since some assets, such as computers, tractors, and cars, depreciate in value almost as soon as they are acquired. They argued that the value of a company's assets should be measured not by their book value, but by how much money they were likely to make the company in future. Others pointed out that some industries are so unstable that it is difficult to meaningfully quantify the assets of the companies involved in them. Still others have criticized Graham's theory for ignoring factors that cannot be easily quantified, such as the quality of a company's leadership. Despite this criticism, studies have shown that value investing seems to increase an investor's chance of making money on the stock exchange. To most people today, Graham's basic theory may seem like little more than common sense; yet there are still many investors who allow themselves to get caught up in the excitement of market fluctuations and who stop making rational investment decisions. We see this in the creation and bursting of stock bubbles. A stock bubble occurs when people focus purely on market trends without stopping to examine the actual worth of the companies whose stock they are buying. Normally, this is driven by a belief that companies in a certain sector are on the verge of a breakthrough that will drive their profits up. Investors pour money into buying these companies' stocks, which drives up the stocks' price. This in turn makes their investment seem good to others, who then follow suit, driving the price up even higher and encouraging still more people to invest in those stocks. This upward cycle cannot continue indefinitely, however. Eventually, the stock prices are so much higher than those companies' financial positions should allow that some of the investors get nervous and start selling stock. The prices then begin to drop, and everyone involved panics, trying to sell at the same time, rendering those stocks virtually worthless. In a very real sense, the stock market crash that launched the Great Depression was a result of the first stock market bubble bursting. The problem was that since no one knew about the bubble phenomenon, the entire market became one big bubble. Today, when bubbles occur, most investors are cushioned from the effects by the fact that the bubble bursting only affects one segment of the market. For example, in the late 1990s, many people got carried away with the surge in popularity of the Internet. With so many people spending so much of their time online, the reasoning went that it was only a matter of time before they began shopping online as well. Companies that got online first would secure the majority of their business sectors' market share. Surely such companies were good investments, or so many people thought. The problem with this reasoning is that it is based on market trends. ■
(A) As more people bought stock in new "dotcom" companies, the stock prices rose, making those stocks seem more attractive to investors. ■
(B) However, most of the companies selling stock had no solid business plan, nor any way to convince people to engage in online transactions widely seen as insecure. ■
(C) They never made any real money, and eventually all of the people who invested in dotcom companies lost their investments. ■
(D) However, most of these people were also invested in other traditional stocks as well, which meant they did not lose everything when the dotcom bubble burst.
单选题
According to paragraph 1, why did Benjamin Graham invent a character called Mr. Market?
单选题
Which of the following sentences best expresses the essential information in the highlighted sentence in the passage? Incorrect answer choices change the meaning of the sentence in important ways or leave out essential information.
单选题
Look at the four squares [■] in the passage that indicate where the following sentence can be added to the passage. As more and more people invested, the prices rose still further, and it seemed that no one could lose money. Where would this sentence best fit?
填空题
Directions: An introductory sentence for a brief summary of the passage is given below. Complete the summary by adding the THREE answer choices that express the most important ideas in the passage. Some answer choices do not belong in the summary because they express ideas that are not given in the passage or are minor ideas in the passage. This question is worth 2 points, Benjamin Graham was an economist who formulated a theory that people should buy stocks based on an analysis of the companies involved rather than on market trends. ·__________________________________________ ·__________________________________________ ·__________________________________________ Answer Choices 1. Graham invented a character called Mr. Market that he used to try to show people the dangers of investing in a company without any knowledge of that company's true value. 2. Graham focused on determining a company's true value based on quantifiable data, such as the value of its assets and the extent of its liabilities, a heavily criticized approach. 3. One criticism of Graham's theory involves the fact that some assets depreciate in value relatively quickly, meaning that an analysis based on asset value could be misleading. 4. While Graham's general ideas seem obvious in hindsight, people still ignore his advice and buy stocks based purely on market performance, leading to stock market bubbles. 5. One recent stock market bubble occurred in the technology sector when investors started buying stocks in dotcom companies with poor business plans, but didn't lose all their money because some of it was invested in traditional stocks. 6. Investors who bought stocks in dotcom companies couldn't avoid the stock market bubble because most of them strictly followed Graham's ideas.