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  • High-Quality Value Investing With Benjamin Graham [View article]
    Thank you for the detailed description of your strategies, banmate6!

    Dollar cost averaging in index funds is a very sound strategy that Graham himself recommended for market beating returns with the least effort.

    Here is what Graham wrote about adjusting for market cycles:

    "We have suggested as a fundamental guiding rule that the investor should never have less than 25% or more than 75% of his funds in common stocks, with a consequent inverse range of between 75% and 25% in bonds. There is an implication here that the standard division should be an equal one, or 50–50, between the two major investment mediums. According to tradition the sound reason for increasing the percentage in common stocks would be the appearance of the “bargain price” levels created in a protracted bear market. Conversely, sound procedure would call for reducing the common-stock component below 50% when in the judgment of the investor the market level has become dangerously high."
    General Portfolio Policy, The Intelligent Investor
    Feb 28, 2015. 09:38 AM | Likes Like |Link to Comment
  • High-Quality Value Investing With Benjamin Graham [View article]
    Graham does mention positive earnings as a requirement for NCAV stocks, manciata.

    From Chapter 15 of The Intelligent Investor - Stock Selection for the Enterprising Investor:
    "Bargain Issues, or Net-Current-Asset Stocks"
    "...price less than the applicable net current assets alone - after deducting all prior claims, and counting as zero the fixed and other assets."
    "...eliminated those which had reported net losses in the last 12-month period."

    The above reference is included in Serenity's other articles.
    But it's an easy-to-miss reference and most NCAV analyses today do miss it.

    Serenity's free Classic Graham Screener lists 50+ stocks selling under their NCAV values, as well as having a positive EPS, today.

    But of course, those results were arrived at with data mining algorithms and were not verified manually. NCAV stocks also have fewer requirements, and so require more verification and diversification, than Defensive and Enterprising quality stocks.
    Feb 27, 2015. 03:24 PM | Likes Like |Link to Comment
  • High-Quality Value Investing With Benjamin Graham [View article]
    Thank you, maybenot!

    Irving Kahn, one of Graham's earliest students, passed away on Tuesday.
    Unfortunately, this article was published before a note about Kahn's passing could be included.

    To quote a line from yesterday's Bloomberg article on Kahn's passing:
    "In 2012, at 106, Kahn told Bloomberg Businessweek that Graham’s principles, though relevant as ever, were increasingly being drowned out by noise."

    But for those of us who can tune out the noise, that's not necessarily a bad thing.

    After all, as Buffett wrote in the Preface to The Intelligent Investor:
    "The sillier the market’s behavior, the greater the opportunity for the business-like investor. Follow Graham and you will profit from folly rather than participate in it."
    Feb 27, 2015. 02:53 PM | 3 Likes Like |Link to Comment
  • 3 Unloved High Growth Plays To Add To Your Watchlist [View article]
    Buffett once wrote a lengthy article explaining how Benjamin Graham's principles are everlasting, their results irrefutable, and Graham's students (such as Buffett himself) consistently exceptional. It's called "The Superinvestors of Graham-and-Doddsville".

    Buffett even named his son after Graham, and describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written".

    In The Intelligent Investor, Graham specified precise qualitative and quantitative rules for doing a complete Value analysis for a stock.

    For example, given below are all Graham ratings for China Distance Education Holdings Ltd (DL).

    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%.

    China Distance Education Holdings Ltd - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 20.00%
    Current Assets ÷ [2 x Current Liabilities]: 103.74%
    Net Current Assets ÷ Long Term Debt: 100.00%
    Earnings Stability (100% ⇒ 10 Years): 30.00%
    Dividend Record (100% ⇒ 20 Years): 10.00%
    Earnings Growth (100% ⇒ 30% Growth): 461.54%
    Graham Number ÷ Previous Close: 30.93%

    Please note that not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results.

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar exact 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.
    Feb 27, 2015. 08:06 AM | Likes Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Dover Corporation [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 mentions it briefly to demonstrate why growth-based valuations are unreliable. But due to a printing omission in recent editions of The Intelligent Investor, this formula is sometimes mistakenly used today instead of Graham's actual (and more thorough) methods.

    Article 1: http://seekingalpha.co... discusses the issue in detail.

    In fact, most of what Graham actually taught has been forgotten today, or is applied inaccurately.

    Another example from 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 criterion. Checking for Market Capitalization instead of Sales will - all else being equal - rate overvalued stocks higher than undervalued ones. Other rules mentioned here too - such as dividend record, and PE & PB ratios - are very different from what Graham actually recommended.

    Given below are the actual Graham ratings for Dover Corp (DOV), 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%.

    Dover Corp - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 1,550.60%
    Current Assets ÷ [2 x Current Liabilities]: 46.94%
    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): 134.62%
    Graham Number ÷ Previous Close: 68.29%

    Please note that not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just 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 completely, Graham's rules give a clear and quantifiable frame of reference for measuring a stock's margin of safety.

    Article 2: http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similarly precise 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.
    Feb 26, 2015. 04:43 PM | 1 Like Like |Link to Comment
  • Best S&P 500 Energy Stocks According To Buffett Principles: A Look At FMC Technologies [View article]
    Benjamin Graham 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 lengthy article explaining how Benjamin Graham's principles are everlasting, their results irrefutable, and Graham's students (such as Buffett himself) consistently exceptional. It's called "The Superinvestors of Graham-and-Doddsville".

    Buffett even named his son after Graham, and describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written".

    In The Intelligent Investor, Graham recommended various categories of stocks and specified precise qualitative and quantitative rules for each category.

    For example, given below are all Graham ratings for FMC Technologies Inc (FTI).

    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%.

    FMC Technologies Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 1,588.60%
    Current Assets ÷ [2 x Current Liabilities]: 79.67%
    Net Current Assets ÷ Long Term Debt: 127.37%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 0.00%
    Earnings Growth (100% ⇒ 30% Growth): 205.83%
    Graham Number ÷ Previous Close: 56.72%

    Please note that not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results.

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar exact 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.
    Feb 26, 2015. 07:24 AM | Likes Like |Link to Comment
  • Don't Let Your Brain Ruin Your Returns [View article]
    Nice work elaborating on common biases that affect investment decisions!

    The world's best investors have been using well-defined processes to compensate for human emotions and biases for decades.

    "Our main objective will be to guide the reader against the areas of possible substantial error and to develop policies with which he will be comfortable. We shall say quite a bit about the psychology of investors. For indeed, the investor’s chief problem—and even his worst enemy—is likely to be himself."
    Introduction to The Intelligent Investor, Benjamin Graham

    "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."
    Preface to The Intelligent Investor, Warren E. Buffett

    Warren Buffett once wrote a lengthy article explaining how Benjamin Graham's principles are everlasting, their results irrefutable, and Graham's students (such as Buffett himself) consistently exceptional. It's called "The Superinvestors of Graham-and-Doddsville".

    But most of what Benjamin Graham taught has been forgotten today, or is applied inaccurately.

    Buffett describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written". In The Intelligent Investor, Graham recommended various categories of stocks and specified precise qualitative and quantitative rules for each category.

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a precise 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.
    Feb 25, 2015. 04:01 PM | Likes Like |Link to Comment
  • An In-Depth Look At The Sequoia Fund [View article]
    Benjamin Graham was a scholar and financial analyst who mentored legendary investors such as Warren Buffett, William J. Ruane, Irving Kahn and Walter J. Schloss.

    William J. Ruane was the founder and manager of the Sequoia Fund.

    In his article "The Superinvestors of Graham-and-Doddsville", Buffett also explains how Benjamin Graham's principles are everlasting, their results irrefutable, and his students (such as Ruane and Buffett himself) consistently exceptional.

    This is the full text of what Buffett wrote about Ruane in the article:
    "Table 4 shows the record of the Sequoia Fund, which is managed by a man whom I met in 1951 in Ben Graham’s class, Bill Ruane. After getting out of Harvard Business School, he went to Wall Street. Then he realized that he needed to get a real business education so he came up to take Ben’s course at Columbia, where we met in early 1951. Bill’s record from 1951 to 1970, working with relatively small sums, was far better than average. When I wound up Buffett Partnership I asked Bill if he would set up a fund to handle all our partners, so he set up the Sequoia Fund. He set it up at a terrible time, just when I was quitting. He went right into the two-tier market and all the difficulties that made for comparative performance for value-oriented investors. I am happy to say that my partners, to an amazing degree, not only stayed with him but added money, with the happy result shown.

    There’s no hindsight involved here. Bill was the only person I recommended to my partners, and I said at the time that if he achieved a four-point-per-annum advantage over the Standard & Poor’s, that would be solid performance. Bill has achieved well over that, working with progressively larger sums of money. That makes things much more difficult. Size is the anchor of performance."

    In fact, Benjamin Graham's influence on his students was so significant that Buffett even named his son after Graham, and describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written".

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by an exact 17-point Benjamin Graham assessment (including the seven points mentioned in the above article), with no adjustments other than those for inflation.
    Feb 24, 2015. 03:47 PM | Likes Like |Link to Comment
  • 225 Value Stocks Ready For Review [View article]
    Hello Chad Brown,

    Screeners do help shortlist stocks that meet one's requirements.
    But large scale quantitative analysis is just the first step. It's always recommended that one verify shortlisted stocks oneself before making a final investment decision.

    Serenity provides two web-based screeners:
    1. A classic Graham screener (free) that lets you screen 5000+ NYSE and NASDAQ stocks by a strict 17-point Benjamin Graham assessment.
    2. An advanced (more flexible) Graham screener that lets you screen the same stocks by customized combinations of the 17 Graham rules (such as the Graham Number).

    http://seekingalpha.co... explains how to use them.

    This information is provided because you asked about such screeners.
    Your feedback would be highly appreciated.

    Thank you.
    Feb 21, 2015. 04:12 PM | Likes Like |Link to Comment
  • General Dynamics Is In A Good Position To Survive Defense Spending Cuts [View article]
    Please note that before being checked against the Graham Number, Benjamin Graham required that a stock first meet six other qualitative criteria.

    For example, given below are all Graham ratings for General Dynamics (GD).

    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%.

    General Dynamics - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 6,244.00%
    Current Assets ÷ [2 x Current Liabilities]: 73.34%
    Net Current Assets ÷ Long Term Debt: 145.65%
    Earnings Stability (100% ⇒ 10 Years): 10.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 97.40%
    Graham Number ÷ Previous Close: 46.23%

    Also, not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results.

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar exact 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.
    Feb 19, 2015. 01:39 PM | Likes Like |Link to Comment
  • Investing For Beginners With Benjamin Graham [View article]
    Thank you, cardioid!

    Graham himself warned against charting and technical analysis, saying:
    "We do not hesitate to declare that this approach is as fallacious as it is popular."

    The full text of Graham's warning is given in the comment posted a little above this one, in reply to MacKay Dave.
    Feb 19, 2015. 06:37 AM | Likes Like |Link to Comment
  • United Parcel Service - Dividend Stock Analysis [View article]
    Please note that before being checked against the Graham Number, Benjamin Graham required that a stock first meet six other qualitative criteria.

    For example, given below are all Graham ratings for The United Parcel Service, Inc. (UPS).

    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%.

    United Parcel Service, Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 11,088.00%
    Current Assets ÷ [2 x Current Liabilities]: 93.86%
    Net Current Assets ÷ Long Term Debt: 57.80%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 75.00%
    Earnings Growth (100% ⇒ 30% Growth): 68.83%
    Graham Number ÷ Previous Close: 21.09%

    Also, not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just extremely selective. Graham designed and backtested his framework for over 50 years, to deliver the best possible long-term results.

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar exact 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.
    Feb 18, 2015. 10:01 AM | Likes Like |Link to Comment
  • VALX: A New Guru ETF That Mimics The All-Time Greats [View article]
    Warren Buffett once said "Wide diversification is only required when investors do not understand what they are doing."
    And excessive diversification of principle can be even more dangerous than that of principal.

    Buffett also once wrote a lengthy article explaining how Benjamin Graham's principles are everlasting, their results irrefutable, and his students consistently exceptional. It's called "The Superinvestors of Graham-and-Doddsville".

    Net Current Asset Value (or NCAV) stocks are only the most well-known of Benjamin Graham's strategies, and the source of the general misconception that Graham only recommended cheap stocks. But Graham actually recommended Index, Defensive and Enterprising stocks before NCAV stocks; and all were allowed higher Quantitative valuations and required greater Qualitative checks.

    Benjamin Graham actually emphasized that the secret of sound investment was the "Margin of Safety".

    Warren Buffett describes Graham's book - The Intelligent Investor - as "by far the best book about investing ever written" (in its preface, which Buffett wrote). In The Intelligent Investor, Graham recommended various categories of stocks and specified precise qualitative and quantitative rules for each category.

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a precise 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.
    Feb 17, 2015. 06:06 PM | Likes Like |Link to Comment
  • ModernGraham Annual Valuation Of Procter & Gamble [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 mentions it briefly to demonstrate why growth-based valuations are unreliable. But due to a printing omission in recent editions of The Intelligent Investor, this formula is sometimes mistakenly used today instead of Graham's actual (and more thorough) methods.

    Article 1: http://seekingalpha.co... discusses the issue in detail.

    In fact, most of what Graham actually taught has been forgotten today, or is applied inaccurately.

    Another example from 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 criterion. Checking for Market Capitalization instead of Sales will - all else being equal - rate overvalued stocks higher than undervalued ones. Other rules mentioned here too - such as dividend record, and PE & PB ratios - are very different from what Graham actually recommended.

    Given below are the actual Graham ratings for The Procter & Gamble Company (PG), 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%.

    Procter & Gamble Company - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 16,834.00%
    Current Assets ÷ [2 x Current Liabilities]: 39.93%
    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): 110.92%
    Graham Number ÷ Previous Close: 52.59%

    Please note that not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just 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 completely, Graham's rules give a clear and quantifiable frame of reference for measuring a stock's margin of safety.

    Article 2: http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similarly precise 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.
    Feb 17, 2015. 05:49 PM | 2 Likes Like |Link to Comment
  • Analysts Continue To Use Wrong Benjamin Graham Formula [View article]
    Also, not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just 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 completely, Graham's rules give a clear quantifiable frame of reference for comparison.
    Feb 17, 2015. 08:40 AM | Likes Like |Link to Comment
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