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  • True Value Investing Includes Quality And Growth [View article]
    It's unlikely that everyone else bets heavily on a few promising stocks.

    The takeaway here is that Graham advised never having more than 10% of one's portfolio in a single stock.
    Even if the stock were of defensive investment quality.
    Apr 24, 2015. 10:25 AM | Likes Like |Link to Comment
  • The Perversion Of The Investment Catalyst [View article]
    For a careful reader, the last 3 comments should be a good indication of how conscientiously Graham must have been quoted.
    Apr 24, 2015. 10:02 AM | Likes Like |Link to Comment
  • The Perversion Of The Investment Catalyst [View article]
    Actually, Munger said:
    "Another thing you have to do, of course, is to have a lot of assiduity. I like that word because it means: sit down on your ass until you do it."

    Munger's use of the word is consistent with the regular dictionary definition. It's from his commencement address at USC Law School in 2007.

    Here's the youtube video of him saying it:
    http://bit.ly/1yW4WL4

    What you're using is another misquote, like with the Benjamin Graham formula.
    Apr 23, 2015. 07:33 AM | 1 Like Like |Link to Comment
  • The Outlook For Spain And The Eurozone [View article]
    Have you tried analyzing the European markets with a broad market quantitative measure like the CAPE ratio?

    The CAPE ratio is based on the writings of Benjamin Graham in his legendary 1934 book “Security Analysis.”

    Benjamin Graham - once known as The Dean of Wall Street - was a scholar and financial analyst who mentored legendary investors such as Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss.

    Warren Buffett once wrote a detailed article explaining how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The article is called "The Superinvestors of Graham-and-Doddsville".

    Buffett describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written" (in its preface).
    Apr 22, 2015. 05:25 PM | Likes Like |Link to Comment
  • The Perversion Of The Investment Catalyst [View article]
    dictionary dot com defines assiduity as "constant or close application or effort".
    That's the opposite of "sitting on your ass and doing nothing".

    And to say Benjamin Graham spent his days looking for cheap stocks is to do great disservice to the man who mentored legendary investors such as Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss; and was once known as The Dean of Wall Street.

    Warren Buffett once wrote a detailed article explaining how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The article is called "The Superinvestors of Graham-and-Doddsville".

    Buffett describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written" (in its preface).

    Graham's first recommended strategy - for casual investors - was to invest in Index stocks.
    For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them.
    For advanced investors, Graham described various "special situations".

    The first requires almost no analysis, and is easily accomplished today with a good S&P500 Index fund.
    The last requires more than the average level of experience, intuition and talent. Such stocks are not amenable to impartial algorithmic analysis, and require a case-specific approach.

    But Defensive, Enterprising and NCAV stocks can be reliably detected by today's data-mining software, and offer a great avenue for accurate automated analysis and profitable investment.

    Most Graham analyses today, however, only follow the quantitative part of Graham's recommendations (NCAV, Graham Number etc) without the supporting qualitative criteria; leading to the misconception that Graham only recommended inexpensive stocks.

    For example, the first two valuation methods mentioned on the oldschoolvalue website are NCAV and the Benjamin Graham Formula.

    1. Net Current Asset Value (or NCAV/Net-Net)

    The NCAV valuation method was indeed developed and recommended by Benjamin Graham. But Graham also recommended that an NCAV stock have a positive EPS figure to be eligible for investment.

    The positive EPS requirement is also logical, if you think about it. There's really not much point buying a stock solely for its current assets (cash equivalents), if the company's losing money.

    But most NCAV recommendations today are done without this quality check, often leading to what are referred to as value traps. Such problems are not the result of following Graham though, but rather the result of applying Graham's methods incorrectly.

    2. Benjamin Graham Formula

    This is a variation of the below equation:

    V = EPS x (8.5 + 2g), or
    Value = Current (Normal) Earnings x (8.5 plus twice the expected annual growth rate)

    Benjamin Graham actually gave several warnings about this formula and only mentioned it briefly to demonstrate why the market's growth rate expectations are rarely justified. But due to an omission in recent editions of The Intelligent Investor, this formula is often mistakenly used today instead of Graham's actual (and more thorough) methods of stock valuation.

    Article: Analysts Continue To Use Wrong Benjamin Graham Formula (http://seekingalpha.co...) discusses the issue in detail.
    Apr 22, 2015. 05:07 PM | Likes Like |Link to Comment
  • Buffett Or Beal? Place Your Bets With Oil [View article]
    Benjamin Graham - once known as The Dean of Wall Street - was a scholar and financial analyst who mentored legendary investors such as Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss.

    Warren Buffett once wrote a detailed article explaining how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The article is called "The Superinvestors of Graham-and-Doddsville".

    Buffett describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written" (in its preface).

    Benjamin Graham's first recommended strategy - for casual investors - was to invest in Index stocks.
    For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them.
    For advanced investors, Graham described various "special situations".

    The first requires almost no analysis, and is easily accomplished today with a good S&P500 Index fund.
    The last requires more than the average level of experience, intuition and talent. Such stocks are not amenable to impartial algorithmic analysis, and require a case-specific approach.

    But Defensive, Enterprising and NCAV stocks can be reliably detected by today's data-mining software, and offer a great avenue for accurate automated analysis and profitable investment.

    For example, given below are the actual Graham ratings for Exxon Mobil Corporation (XOM), with no adjustments other than those for inflation.

    Defensive Graham investment requires that all ratings be 100% or more.
    Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Exxon Mobil Corporation - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 76,520.00%
    Current Assets ÷ [2 x Current Liabilities]: 0.00%
    Net Current Assets ÷ Long Term Debt: 0.00%
    Earnings Stability (100% ⇒ 10 Years): 0.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 66.48%
    Graham Number ÷ Previous Close: 0.00%

    Not all stocks failing Graham's rules are necessarily bad investments. They may fall under "special situations". Graham's rules are also extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results. Even when stocks don't clear them, Graham's rules give a clear quantifiable measure of a stock's margin of safety.

    Thank you.
    Apr 21, 2015. 05:47 PM | Likes Like |Link to Comment
  • Tesla Subsidies In Danger: The Trend Is Not Its Friend [View article]
    Benjamin Graham's first recommended strategy - for casual investors - was to invest in Index stocks.
    For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them.
    For advanced investors, Graham described various "special situations".

    The first requires almost no analysis, and is easily accomplished today with a good S&P500 Index fund.
    The last requires more than the average level of experience, intuition and talent. Such stocks are not amenable to impartial algorithmic analysis, and require a case-specific approach.

    But Defensive, Enterprising and NCAV stocks can be reliably detected by today's data-mining software, and offer a great avenue for accurate automated analysis and profitable investment.

    For example, given below are the actual Graham ratings for Tesla Motors Inc (TSLA), with no adjustments other than those for inflation.

    Defensive Graham investment requires that all ratings be 100% or more.
    Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Tesla Motors Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 639.60%
    Current Assets ÷ [2 x Current Liabilities]: 89.46%
    Net Current Assets ÷ Long Term Debt: 58.07%
    Earnings Stability (100% ⇒ 10 Years): 0.00%
    Dividend Record (100% ⇒ 20 Years): 0.00%
    Earnings Growth (100% ⇒ 30% Growth): 0.00%
    Graham Number ÷ Previous Close: 0.00%

    Benjamin Graham - once known as The Dean of Wall Street - was a scholar and financial analyst who mentored legendary investors such as Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss.

    Warren Buffett once wrote a detailed article explaining how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The article is called "The Superinvestors of Graham-and-Doddsville".

    Buffett describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written" (in its preface).

    Not all stocks failing Graham's rules are necessarily bad investments. They may fall under "special situations". Graham's rules are also extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results. Even when stocks don't clear them, Graham's rules give a clear quantifiable measure of a stock's margin of safety.

    Thank you.
    Apr 21, 2015. 05:44 PM | 5 Likes Like |Link to Comment
  • 1Q 2015 Smead Value Fund Shareholder Letter [View article]
    Very informative!
    Especially the notes on volatility vs risk, and the excerpt from Buffett's annual letter to shareholders.

    Buffett also said more simply:
    "Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell."

    And more interestingly:
    "The stock market is a no-called strike game. You don't have to swing at everything -- you can wait for your pitch. The problem when you're a money manager is that your fans keep yelling, 'Swing, you bum!'"

    Benjamin Graham - once known as The Dean of Wall Street - was a scholar and financial analyst who mentored legendary investors such as Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss.

    Buffett describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written" (in its preface).

    Graham's first recommended strategy - for casual investors - was to invest in Index stocks.
    For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them.
    For advanced investors, Graham described various "special situations".

    The first requires almost no analysis, and is easily accomplished today with a good S&P500 Index fund.
    The last requires more than the average level of experience, intuition and talent. Such stocks are not amenable to impartial algorithmic analysis, and require a case-specific approach.

    But Defensive, Enterprising and NCAV stocks can be reliably detected by today's data-mining software, and offer a great avenue for accurate automated analysis and profitable investment.

    For example, given below are the actual Graham ratings for Franklin Resources Inc (BEN), with no adjustments other than those for inflation.

    Defensive Graham investment requires that all ratings be 100% or more.
    Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Franklin Resources Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 1,689.20%
    Current Assets ÷ [2 x Current Liabilities]: 509.67%
    Net Current Assets ÷ Long Term Debt: 521.92%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 143.52%
    Graham Number ÷ Previous Close: 73.52%

    Thank you.
    Apr 19, 2015. 06:06 PM | Likes Like |Link to Comment
  • Graham Value Portfolio Update [View article]
    Benjamin Graham - once known as The Dean of Wall Street - was a scholar and financial analyst who mentored legendary investors such as Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss.

    Warren Buffett once wrote a detailed article explaining how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The article is called "The Superinvestors of Graham-and-Doddsville".

    Buffett describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written" (in its preface).

    Graham's first recommended strategy - for casual investors - was to invest in Index stocks.
    For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them.
    For advanced investors, Graham described various "special situations".

    The first requires almost no analysis, and is easily accomplished today with a good S&P500 Index fund.
    The last requires more than the average level of experience, intuition and talent. Such stocks are not amenable to impartial algorithmic analysis, and require a case-specific approach.

    But Defensive, Enterprising and NCAV stocks can be reliably detected by today's data-mining software, and offer a great avenue for accurate automated analysis and profitable investment.

    For example, given below are the actual Graham ratings for Alamo Group Inc (ALG), with no adjustments other than those for inflation.

    Defensive Graham investment requires that all ratings be 100% or more.
    Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Alamo Group Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 155.28%
    Current Assets ÷ [2 x Current Liabilities]: 209.06%
    Net Current Assets ÷ Long Term Debt: 100.00%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 169.35%
    Graham Number ÷ Previous Close: 69.76%

    Not all stocks failing Graham's rules are necessarily bad investments. They may fall under "special situations". Graham's rules are also extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results. Even when stocks don't clear them, Graham's rules give a clear quantifiable measure of a stock's margin of safety.

    Thank you.
    Apr 19, 2015. 04:28 PM | 1 Like Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Dow Chemical Company [View article]
    Thank you, sfpdf.
    Apr 19, 2015. 04:25 PM | Likes Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Dow Chemical Company [View article]
    The ModernGraham website cites the following formula as one of the Graham methods applied:

    Intrinsic Value = EPS x (8.5 + 2xGrowth)

    Benjamin Graham actually gave several warnings about this formula and only mentioned it briefly to demonstrate why oversimplified growth-based valuations are unreliable. But due to an omission in recent editions of The Intelligent Investor, this formula is often mistakenly used today instead of Graham's actual (and more thorough) methods.

    Article: Analysts Continue To Use Wrong Benjamin Graham Formula (http://seekingalpha.co...) discusses the issue in detail.

    Another ModernGraham rule mentioned in the above article is:
    "Adequate Size of Enterprise - market capitalization of at least $2 billion"

    Graham actually recommended "Not less than $100 million of annual sales" for this rule. Checking for Market Capitalization instead of Sales will - all else being equal - rate overvalued stocks higher than undervalued ones.

    Graham's first recommended strategy - for casual investors - was to invest in Index stocks.
    For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 rules for finding them.
    For advanced investors, Graham described various "special situations".

    The first requires almost no analysis, and is easily accomplished today with a good S&P500 Index fund.
    The last requires more than the average level of experience, intuition and talent. Such stocks are not amenable to impartial quantitative analysis, and require a case-specific approach.

    But Defensive, Enterprising and NCAV stocks can be reliably detected by today's data-mining software, and offer a great avenue for detailed objective analysis and profitable investment.

    For example, given below are the actual Graham ratings for Dow Chemical Co (DOW), with no adjustments other than those for inflation.

    Defensive Graham investment requires that all ratings be 100% or more.
    Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Dow Chemical Co - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 11,633.40%
    Current Assets ÷ [2 x Current Liabilities]: 104.66%
    Net Current Assets ÷ Long Term Debt: 67.28%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 48.72%
    Graham Number ÷ Previous Close: 59.07%

    Not all stocks failing Graham's rules are necessarily bad investments. They may fall under "special situations". Graham's rules are also extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results. Even when stocks don't clear them, Graham's rules give a clear quantifiable measure of a stock's margin of safety.

    Thank you.
    Apr 19, 2015. 10:39 AM | 3 Likes Like |Link to Comment
  • True Value Investing Includes Quality And Growth [View article]
    Also, here's a note on Value and Growth from Warren Buffett's 1992 letter to shareholders:

    "most analysts feel they must choose between two approaches customarily thought to be in opposition: "value" and "growth." Indeed, many investment professionals see any mixing of the two terms as a form of intellectual cross-dressing."

    "In our opinion, the two approaches are joined at the hip: Growth is always a component in the calculation of value, constituting a variable whose importance can range from negligible to enormous and whose impact can be negative as well as positive. In addition, we think the very term "value investing" is redundant. What is "investing" if it is not the act of seeking value at least sufficient to justify the amount paid?"

    Growth is very much a part of true value investing, and is checked for objectively - using past growth rates - in Graham's real stock selection framework.
    For details, please see http://seekingalpha.co...

    Thank you.
    Apr 19, 2015. 10:34 AM | Likes Like |Link to Comment
  • True Value Investing Includes Quality And Growth [View article]
    Didn't get that, Hardog. Can you elaborate?
    Apr 18, 2015. 10:54 AM | Likes Like |Link to Comment
  • Wells Fargo: Warren Buffett Was Right All Along [View article]
    Benjamin Graham - once known as The Dean of Wall Street - was a scholar and financial analyst who mentored legendary investors such as Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss.

    Warren Buffett once wrote a detailed article explaining how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The article is called "The Superinvestors of Graham-and-Doddsville".

    Buffett describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written" (in its preface).

    Graham's first recommended strategy - for casual investors - was to invest in Index stocks.
    For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them.
    For advanced investors, Graham described various "special situations".

    The first requires almost no analysis, and is easily accomplished today with a good S&P500 Index fund.
    The last requires more than the average level of experience, intuition and talent. Such stocks are not amenable to impartial algorithmic analysis, and require a case-specific approach.

    But Defensive, Enterprising and NCAV stocks can be reliably detected by today's data-mining software, and offer a great avenue for accurate automated analysis and profitable investment.

    For example, given below are the actual Graham ratings for Wells Fargo & Co (WFC), with no adjustments other than those for inflation.

    Defensive Graham investment requires that all ratings be 100% or more.
    Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Wells Fargo & Co - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 16,590.40%
    Current Assets ÷ [2 x Current Liabilities]: 1.32%
    Net Current Assets ÷ Long Term Debt: 0.00%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 123.42%
    Graham Number ÷ Previous Close: 19.70%

    Stocks failing Graham's rules are not necessarily bad investments. They may fall under "special situations". Graham's rules are also extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results. Even when stocks don't clear them, Graham's rules give a clear quantifiable measure of a stock's Margin of Safety.

    Thank you.
    Apr 16, 2015. 06:00 PM | 2 Likes Like |Link to Comment
  • Chesapeake Offers Upside Of Nearly 40% With Minimal Downside Risk [View article]
    Benjamin Graham's first recommended strategy - for casual investors - was to invest in Index stocks.
    For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them.
    For advanced investors, Graham described various "special situations".

    The first requires almost no analysis, and is easily accomplished today with a good S&P500 Index fund.
    The last requires more than the average level of experience, intuition and talent. Such stocks are not amenable to impartial algorithmic analysis, and require a case-specific approach.

    But Defensive, Enterprising and NCAV stocks can be reliably detected by today's data-mining software, and offer a great avenue for accurate automated analysis and profitable investment.

    For example, given below are the actual Graham ratings for Chesapeake Energy Corp (CHK), with no adjustments other than those for inflation.

    Defensive Graham investment requires that all ratings be 100% or more.
    Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Chesapeake Energy Corp - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 4,088.40%
    Current Assets ÷ [2 x Current Liabilities]: 33.15%
    Net Current Assets ÷ Long Term Debt: 0.00%
    Earnings Stability (100% ⇒ 10 Years): 10.00%
    Dividend Record (100% ⇒ 20 Years): 70.00%
    Earnings Growth (100% ⇒ 30% Growth): 26.64%
    Graham Number ÷ Previous Close: 134.94%

    Benjamin Graham - once known as The Dean of Wall Street - was a scholar and financial analyst who mentored legendary investors such as Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss.

    Warren Buffett once wrote a detailed article explaining how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The article is called "The Superinvestors of Graham-and-Doddsville".

    Buffett describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written" (in its preface).

    Stocks failing Graham's rules are not necessarily bad investments. They may fall under "special situations". Graham's rules are also extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results. Even when stocks don't clear them, Graham's rules give a clear quantifiable measure of a stock's Margin of Safety.

    Thank you.
    Apr 16, 2015. 05:19 PM | 2 Likes Like |Link to Comment
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