From the first lecture...
"First, with regard to continuity: The extraordinary thing about the securities market, if you judge it over a long period of years, is the fact that it does not go off on tangents permanently, but it remains in continuous orbit. When I say that it doesn't go off on tangents, I mean the simple point that after the stock market goes up a great deal it not only comes down a great deal but it comes down to levels to which we had previously been accustomed. Thus we have never found the stock market as a whole going off into new areas and staying there permanently because there has been a permanent change in the basic conditions. I think you would have expected such new departures in stock prices. For the last thirty years, the period of time that I have watched the securities market, we have had two world wars; we have had a tremendous boom and a tremendous deflation; we now have the Atomic Age on us. Thus you might well assume that the security market could really have been permanently transformed at one time or another, so that the past records might not have been very useful in judging future values."
Does this statement remain true today? If I understand what Graham is saying here, it is that if you look at the overall trend of the stock market, it remains consistent. You might expect new technologies or methods to set the markets off in a different trend, but over the long term the markets have continued on a consistent trend over the long term.
Here's a useful chart to illustrate the point. This is a graph of the S&P 500 index from 1950 to current: http://finance.yahoo.com/q/bc?s=%5EGSPC&t=my
Looking at this chart, you could draw different conclusions. One way of looking this chart is that you could break the chart into two sections: the first section would go from 1950-1975 and the second from 1975-current. In this way, the first section follows a certain growth rate and then the trend follows a markedly different growth rate from 1975 onwards. A second way of looking at this same chart is to put a straight line from 1950 to current. Then note that from 1955-1970 the index was above the trend-line (over-valued), the period from the mid 70's to the late 80's was under the trend-line (under-valued).
No matter how you look at it, the Internet Bubble certainly stands out. That's the period around the year 2000. It was around that Internet Bubble that people started to talk about the new economy breaking rules of the old economy. In some ways, that meant certain people believed the markets would break out from the old trend-line. As we look back at that experience, we can see that no rules of the old economy were broken and they brought things back to reality by 2003.
The purpose of these discussions is to determine if there are "market inefficiencies" that present opportunities for investment that would yield better than average returns.