The primary task of security analysis is to create logic where none exists. From 1952 to 1972, analysts provided reassuring rationalizations as growth stocks became more and more overpriced. Were you instinctively uneasy when urged to buy, at 40 or 50 times earnings, stocks with miniscule dividend yields? Analysts were prepared to prove by charts, statistics, and smooth talk that you would be able to sell those stocks at a profit to someone even more foolish.

The recent bear market in growth stocks, however, cries out for new rationalizations: (1) a logical explanation of the demise of the growth philosophy and (2) a justification for sharply lower price levels.

In that environment, growth stocks, dependent on market appreciation for the major portion of their investment return, ceased to be desirable. In their place, investors have come to seek a real and payable return on equity investment: The author proposes that dividend yield, when measured against the value he assigns, must reach the current long-term yields on fixed income securities in five years.