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  • Benjamin Graham's Defensive Versus Enterprising Investor Performance Over The Dismal Decade Of 2000-2009 [View article]
    From The Intelligent Investor:
    "there has developed the general notion that the rate of return which the investor should aim for is more or less proportionate to the degree of risk he is ready to run. Our view is different. The rate of return sought should be dependent, rather, on the amount of intelligent effort the investor is willing and able to bring to bear on his task. The minimum return goes to our passive investor, who wants both safety and freedom from concern. The maximum return would be realized by the alert and enterprising investor who exercises maximum intelligence and skill."

    Graham's Defensive strategy was never meant to outperform the Enterprising ones. It was merely designed for less dedicated investors.

    Graham's first recommended strategy - for novice 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 professional investors, Graham described various special situations or "workouts".

    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 ability and experience. Such stocks are also 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.
    Jul 22, 2015. 05:43 PM | 1 Like Like |Link to Comment
  • Benjamin Graham's Defensive Versus Enterprising Investor Performance Over The Dismal Decade Of 2000-2009 [View article]
    If one of them is an edition without Jason Zweig's commentary, you may find the following article interesting.

    Article: Understanding The Benjamin Graham Formula Correctly (http://seekingalpha.co...)
    Jul 22, 2015. 05:25 PM | Likes Like |Link to Comment
  • Investing For Beginners With Benjamin Graham [View article]
    Dear npearson86,

    The Advanced Graham Screener now has an optional Equity÷Debt filter that allows for the screening of Utilities and Financials without using the Current Asset criteria.

    The Classic Graham Screener and default Graham analyses remain unchanged.

    Thanks again!
    Jul 21, 2015. 10:52 AM | Likes Like |Link to Comment
  • Kroger Company Is Undervalued But Speculative [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 with this formula and only used it to demonstrate that the market's growth rate expectations were never reliable. But due to an omission in recent editions of The Intelligent Investor, this formula is often mistakenly used today to value stocks instead of Graham's actual (and more thorough) methods.

    Article: Understanding The Benjamin Graham Formula Correctly (http://seekingalpha.co...) discusses the issue in detail.

    Graham's first recommended strategy - for novice 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 professional investors, Graham described various special situations or "workouts".

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

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

    Kroger Co (KR) - Defensive Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 21,692.00%
    Current Assets ÷ [2 x Current Liabilities]: 39.07%
    Net Current Assets ÷ Long Term Debt: 0.00%
    Equity ÷ Debt (for Utilities and Financials): 21.52%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 50.00%
    Earnings Growth (100% ⇒ 30% Growth): 154.18%
    Graham Number ÷ Previous Close: 71.51%

    Note: Stocks failing Graham's rules are not necessarily bad investments. They may fall under Graham's "special situations" category. Graham's rules are also extremely selective.
    Jul 20, 2015. 08:59 AM | Likes Like |Link to Comment
  • Intuit A Great Company But Overvalued [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 with this formula and only used it to demonstrate that the market's growth rate expectations were never reliable. But due to an omission in recent editions of The Intelligent Investor, this formula is often mistakenly used today to value stocks instead of Graham's actual (and more thorough) methods.

    Article: Understanding The Benjamin Graham Formula Correctly (http://seekingalpha.co...) discusses the issue in detail.

    Graham's first recommended strategy - for novice 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 professional investors, Graham described various special situations or "workouts".

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

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

    Intuit Inc (INTU) - Defensive Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 916.00%
    Current Assets ÷ [2 x Current Liabilities]: 92.22%
    Net Current Assets ÷ Long Term Debt: 240.48%
    Assets ÷ Equity (Equity Multiplier): 168.97%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 25.00%
    Earnings Growth (100% ⇒ 30% Growth): 191.54%
    Graham Number ÷ Previous Close: 24.61%

    Note: Stocks failing Graham's rules are not necessarily bad investments. They may fall under Graham's "special situations" category. Graham's rules are also extremely selective.
    Jul 17, 2015. 05:45 PM | Likes Like |Link to Comment
  • Is Buffett Purchasing Another Australian Company? [View article]
    Benjamin Graham - also 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 wrote the preface for Graham's book - The Intelligent Investor - in which he calls it "by far the best book about investing ever written."

    Graham's first recommended strategy - for novice 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 professional investors, Graham described various special situations or "workouts".

    For example, given below are the Graham ratings for BHP Billiton Ltd (BHP), with no adjustments other than those for inflation.

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

    Sales | Size (100% ⇒ $500 Million): 12,636.00%
    Current Assets ÷ [2 x Current Liabilities]: 61.71%
    Net Current Assets ÷ Long Term Debt: 13.95%
    Assets ÷ Equity (Equity Multiplier): 191.32%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 115.38%
    Graham Number ÷ Previous Close: 145.89%

    Note: Stocks failing Graham's rules are not necessarily bad investments. They may fall under Graham's "special situations" category. Graham's rules are also extremely selective.
    Jul 17, 2015. 08:00 AM | 2 Likes Like |Link to Comment
  • Investing For Beginners With Benjamin Graham [View article]
    That's a great suggestion, npearson86.
    One that definitely bears further examination.

    The following excerpts are from the chapter "Stock Selection for the Defensive Investor" of The Intelligent Investor.

    The Public-Utility “Solution”:
    "We exclude one criterion from our tests of public-utility stocks—namely, the ratio of current assets to current liabilities. The working-capital factor takes care of itself in this industry as part of the continuous financing of its growth by sales of bonds and shares. We do require an adequate proportion of stock capital to debt."

    Investing in Stocks of Financial Enterprises:
    "We have no very helpful remarks to offer in this broad area of investment—other than to counsel that the same arithmetical standards for price in relation to earnings and book value be applied to the choice of companies in these groups as we have suggested for industrial and public-utility investments."

    Serenity's Advanced Graham Screener will have an additional Debt/Equity filter in a week's time.

    Thank you for the valuable suggestion!
    Jul 16, 2015. 09:16 AM | Likes Like |Link to Comment
  • Wide Moat Investing: Is This ETF Delivering On Its Promise? [View article]
    Morningstar's framework, while interesting, does not seem to be based on anything Buffett has said. That's something to think about, considering that Wide Moat Investing's biggest selling point is that it's supposedly endorsed by Buffett.

    Buffett does mention wide moats as an aspect of investment, but the framework he actually recommends is the one he learnt from Graham.

    From Buffett's preface to The Intelligent Investor:
    "To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What's needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework. You must supply the emotional discipline."

    Article: "Is Warren Buffett A Value Investor?" (http://seekingalpha.co...) has more information.
    Jul 14, 2015. 04:22 PM | 1 Like Like |Link to Comment
  • Buffett Smells Value On The Australian Stock Exchange [View article]
    Benjamin Graham - also 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 wrote the preface for Graham's book - The Intelligent Investor - in which he calls it "by far the best book about investing ever written."

    Graham's first recommended strategy - for novice 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 professional investors, Graham described various special situations or "workouts".

    For example, given below are the Graham ratings for BHP Billiton Ltd (BHP), 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%.

    BHP Billiton Ltd (BHP) - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 12,636.00%
    Current Assets ÷ [2 x Current Liabilities]: 61.71%
    Net Current Assets ÷ Long Term Debt: 13.95%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 115.38%
    Graham Number ÷ Previous Close: 147.22%

    Note: Stocks failing Graham's rules are not necessarily bad investments. They may fall under Graham's "special situations" category. Graham's rules are also extremely selective.
    Jul 11, 2015. 06:03 PM | 1 Like Like |Link to Comment
  • Ben Graham's Advice On Choosing Stocks During Tough Markets [View article]
    When copying someone else verbatim, it's generally considered good practice to "quote" them.

    Especially when such content is presented interwoven with one's own writing.

    Given below are excerpts from The Intelligent Investor that have been copied here verbatim.

    From the Introduction:
    "The determining trait of the enterprising (or active, or aggressive) investor is his willingness to devote time and care to the selection of securities that are both sound and more attractive than the average. Over many decades an enterprising investor of this sort could expect a worthwhile reward for his extra skill and effort, in the form of a better average return than that realized by the passive investor."

    Also from the Introduction:
    "sound investment principles produced generally sound results"

    From the chapter "The Investor and Market Fluctuations":
    "Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop."

    From the chapter "General Portfolio Policy":
    "Experience teaches that the time to buy preferred stocks is when their price is unduly depressed by temporary adversity."
    "In other words, they should be bought on a bargain basis or not at all."

    From the chapter "Investment versus Speculation":
    "Never mingle your speculative and investment operations in the same account, nor in any part of your thinking."

    All points in the article are based on Benjamin Graham's teachings.
    But the ones mentioned here have been copied word for word, interwoven with original content.

    Lastly, the oldschoolvalue website cites a variation of the following formula as one of the Graham methods it uses:
    Intrinsic Value = EPS x (8.5 + 2xGrowth)

    Benjamin Graham actually gave several warnings with this formula and only used it to demonstrate that the market's growth rate expectations are never reliable. But due to an omission in recent editions of The Intelligent Investor, this formula is often mistakenly used today to value stocks instead of Graham's actual (and more thorough) methods.

    Article: "Understanding The Benjamin Graham Formula Correctly" (http://seekingalpha.co...) discusses the issue in detail.
    Jul 10, 2015. 10:56 AM | 2 Likes Like |Link to Comment
  • Wide Moat Investing: Is This ETF Delivering On Its Promise? [View article]
    Benjamin Graham - also 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 wrote the preface for Graham's book - The Intelligent Investor - in which he calls it "by far the best book about investing ever written."

    In The Intelligent Investor, Graham wrote:
    "To distill the secret of sound investment into three words, we venture the motto, Margin Of Safety."

    Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them. This framework provides a way of actually measuring a stock's Margin Of Safety, making the investment process both objective and reliable.

    Does Wide Moat Investing include specific rules for measuring the moat around a company as well?
    Jul 9, 2015. 02:49 PM | Likes Like |Link to Comment
  • Why I Bought High Arctic Energy Services [View article]
    That was not the meaning intended, mclovely.
    Apologies for the lack of clarity!

    The article mentioned the Benjamin Graham "Net-Net" stock evaluation method. The comment was simply intended to portray a more complete picture of Graham's various investment strategies.

    Thank you for your comment!
    Jul 8, 2015. 04:57 PM | Likes Like |Link to Comment
  • Why I Bought High Arctic Energy Services [View article]
    Benjamin Graham did recommend Net-Nets or cigar-butt stocks for Enterprising investors, but with additional qualitative checks and diversification requirements.

    From Chapter 15 of The Intelligent Investor - Stock Selection for the Enterprising Investor:
    "Bargain Issues, or Net-Current-Asset Stocks"
    "the results of buying 30 issues at a price less than their net-current-asset value"
    "If we eliminated those which had reported net losses in the last 12-month period"

    The last requirement is the qualitative check for NCAV stocks; and is very important. There's not much point buying a stock for its current assets (cash equivalents) alone, if the company's losing money.

    Since NCAV stocks undergo the least qualitative tests of all of Graham's categories, they also require the most diversification. Graham recommended a portfolio size of 30 for NCAV stocks; or in other words, not more than 3.3% of one's portfolio per NCAV stock.

    Graham's first recommended strategy - for novice 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 professional investors, Graham described various special situations or "workouts".
    Jul 7, 2015. 05:06 PM | Likes Like |Link to Comment
  • Investing For Beginners With Benjamin Graham [View article]
    Thank you, Hardog!

    Serenity's website tutorial was based on this article.
    Jul 3, 2015. 01:50 PM | Likes Like |Link to Comment
  • Naive Graham: Passive Investing According To The Master [View instapost]
    Varan,

    Did you notice that Buffett too recommends an S&P500 Index Fund as a good alternative investment in his 2013 letter to shareholders?

    Serenity's own 2012 article (http://seekingalpha.co...) had recommended a Vanguard S&P500 index fund as a good application of Graham's first strategy for investors.

    Once again, great work!

    Your instablog post provides more value than most articles one comes across these days.
    Jul 3, 2015. 12:11 PM | 1 Like Like |Link to Comment
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