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  • Bed Bath & Beyond: An Attractive Opportunity For Value Investors [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 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: Understanding The Benjamin Graham Formula Correctly (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.

    Given below are the actual Graham ratings for Bed Bath & Beyond Inc (BBBY), 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%.

    Bed Bath & Beyond Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 2,376.00%
    Current Assets ÷ [2 x Current Liabilities]: 105.10%
    Net Current Assets ÷ Long Term Debt: 142.73%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 0.00%
    Earnings Growth (100% ⇒ 30% Growth): 181.14%
    Graham Number ÷ Previous Close: 57.93%

    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.

    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".
    May 22, 2015. 04:42 PM | Likes Like |Link to Comment
  • Friedman Industries: A Classic Graham & Schloss Play [View article]
    Friedman Industries, Inc (FRD) does seem to clear both of Benjamin Graham's rules for NCAV (Net Current Asset Value) investment.

    Benjamin Graham - also known as The Dean of Wall Street and The Father of Value Investing - 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 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.

    Graham recommended that an NCAV stock also have a positive EPS figure to be eligible for investment.

    The positive EPS requirement is the qualitative check for NCAV stocks; and is - if you think about it - a very logical rule. There's really not much point buying a stock for its current assets (cash equivalents), if the company's losing money.

    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".
    May 21, 2015. 06:07 PM | Likes Like |Link to Comment
  • Mattel Is A Strong Company But Needs To Show More Growth [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 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: Understanding The Benjamin Graham Formula Correctly (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.

    Given below are the actual Graham ratings for Mattel Inc (MAT), 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%.

    Mattel Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 1,200.00%
    Current Assets ÷ [2 x Current Liabilities]: 146.28%
    Net Current Assets ÷ Long Term Debt: 99.86%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 117.71%
    Graham Number ÷ Previous Close: 78.92%

    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.

    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".
    May 21, 2015. 04:55 PM | 1 Like Like |Link to Comment
  • A ModernGraham Review Of The Auto Industry [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 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: Understanding The Benjamin Graham Formula Correctly (http://seekingalpha.co...) discusses the issue in detail.

    Another rule mentioned on the ModernGraham website 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.

    For example, given below are the actual Graham ratings for PACCAR Inc (PCAR), 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%.

    PACCAR Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 3,890.00%
    Current Assets ÷ [2 x Current Liabilities]: 126.07%
    Net Current Assets ÷ Long Term Debt: 154.55%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 77.22%
    Graham Number ÷ Previous Close: 58.58%

    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.

    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".
    May 21, 2015. 04:50 PM | Likes Like |Link to Comment
  • How Not To Beat The Market [View article]
    Nice points!
    But do note that excessive diversification can compromise quality of research too.

    Buffett once said:
    "Wide diversification is only required when investors do not understand what they are doing."

    Also, George Soros actually has an elaborate thesis called the "Theory of reflexivity" which he applies to financial markets.

    In fact, the theory of reflexivity is a direct refutation of Efficient Market Hypothesis (EMH); a theory that Buffett too derided in "The Superinvestors of Graham-and-Doddsville".

    Benjamin Graham - also known as The Dean of Wall Street and The Father of Value Investing - 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 Benjamin 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".

    Graham's Value Investing framework acknowledges the stock market's randomness and irrationality, and uses them to the investor's favor. This is why true Value Investing (not bargain hunting) consistently outperforms more impressive looking strategies that are based on the less tenable premise that the stock market can be predicted.

    Article: Value Investing Is Perfect For The Cynical (http://seekingalpha.co...) has more details.

    Thank you.
    May 21, 2015. 03:58 PM | Likes Like |Link to Comment
  • Progressive Corporation Is A Fair Value For Investors [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 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: Understanding The Benjamin Graham Formula Correctly (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.

    Given below are the actual Graham ratings for Progressive Corp (PGR), 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%.

    Progressive Corp - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 3,912.00%
    Current Assets ÷ [2 x Current Liabilities]: 0.00%
    Net Current Assets ÷ Long Term Debt: 0.00%
    Earnings Stability (100% ⇒ 10 Years): 60.00%
    Dividend Record (100% ⇒ 20 Years): 30.00%
    Earnings Growth (100% ⇒ 30% Growth): 77.75%
    Graham Number ÷ Previous Close: 81.49%

    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.

    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".
    May 21, 2015. 03:45 PM | Likes Like |Link to Comment
  • Learning From The Masters: Q&A Session With Chris DeMuth Jr. [View article]
    When Warren Buffett advises investors to own a low cost S&P 500 tracking index fund, he is simply outlining another application of Benjamin Graham's Value Investing principles.

    Benjamin Graham - also known as The Dean of Wall Street and The Father of Value Investing - 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 or "workouts".

    Serenity's own 2+ year old article - "How To Build A Complete Benjamin Graham Portfolio" (http://seekingalpha.co...) - recommends a Vanguard S&P500 index fund as a good application of Graham's first strategy for investors.
    May 21, 2015. 03:29 PM | Likes Like |Link to Comment
  • Value Investing Is Perfect For The Cynical [View article]
    Thank you, Hardog
    May 21, 2015. 01:49 PM | Likes Like |Link to Comment
  • 10 Reasonably-Valued Growth Stocks That Will Likely Outperform The S&P 500 [View article]
    Benjamin Graham - also known as The Dean of Wall Street and The Father of Value Investing - 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 or "workouts".

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

    Benjamin Graham actually did recommend paying more for quality and growth. His only prerequisite was that there be the Margin of Safety between Price and Value.

    While the popular interpretation of the Margin of Safety today is to buy stocks with low P/E and P/B ratios, a true Graham Margin of Safety is both qualitative and quantitative.

    For example, given below are the actual Graham ratings for Trinity Industries Inc (TRN), 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%.

    Trinity Industries Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 1,268.00%
    Current Assets ÷ [2 x Current Liabilities]: 135.82%
    Net Current Assets ÷ Long Term Debt: 48.55%
    Earnings Stability (100% ⇒ 10 Years): 50.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 162.22%
    Graham Number ÷ Previous Close: 113.45%

    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.

    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".
    May 15, 2015. 04:49 PM | 2 Likes Like |Link to Comment
  • Guide To Guru ETF Investing [View article]
    "In total, the product holds 100 stocks in its basket using 17 fundamentally models based on the approach outlined by Buffett, Graham, Neff, Lynch and many others and 10 distinct "guru"-based models based on an array of investment styles, including value, growth, momentum and income."

    Warren Buffett once said:
    "Wide diversification is only required when investors do not understand what they are doing."

    Benjamin Graham - also known as The Dean of Wall Street and The Father of Value Investing - 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 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.
    May 15, 2015. 04:40 PM | Likes Like |Link to Comment
  • Nvidia Fairly Valued By ModernGraham Analysis After Earnings Release [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 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: Understanding The Benjamin Graham Formula Correctly (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.

    Given below are the actual Graham ratings for NVIDIA Corp (NVDA), 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%.

    NVIDIA Corp - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 936.00%
    Current Assets ÷ [2 x Current Liabilities]: 318.81%
    Net Current Assets ÷ Long Term Debt: 344.56%
    Earnings Stability (100% ⇒ 10 Years): 50.00%
    Dividend Record (100% ⇒ 20 Years): 20.00%
    Earnings Growth (100% ⇒ 30% Growth): 74.53%
    Graham Number ÷ Previous Close: 61.30%

    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.

    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".
    May 15, 2015. 04:35 PM | Likes Like |Link to Comment
  • BB&T Pays A Fair Dividend And Looks Good In A ModernGraham Analysis [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 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: Understanding The Benjamin Graham Formula Correctly (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.

    Given below are the actual Graham ratings for BB&T Corp (BBT), 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%.

    BB&T Corp - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 1,782.00%
    Current Assets ÷ [2 x Current Liabilities]: 2.27%
    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): 66.02%
    Graham Number ÷ Previous Close: 106.91%

    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.

    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".
    May 15, 2015. 04:34 PM | Likes Like |Link to Comment
  • Stress Test For Dividend Growth Investors [View article]
    In a field where formulas given as demonstrations of erroneous methods are enthusiastically used to recommend stocks (http://seekingalpha.co...), a comment such as yours is doomed to literal interpretation, six.
    May 12, 2015. 04:24 PM | Likes Like |Link to Comment
  • Stress Test For Dividend Growth Investors [View article]
    Warren Buffett once said:
    "Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market."

    His mentor, Benjamin Graham, wrote:
    "Basically, price fluctuations have only one significant meaning for the true investor. They provide him with an opportunity to buy wisely when prices fall sharply and to sell wisely when they advance a great deal. At other times he will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies."

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

    Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them.

    For example, given below are the actual Graham ratings for General Electric Co (GE), 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%.

    General Electric Co - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 29,720.00%
    Current Assets ÷ [2 x Current Liabilities]: 55.32%
    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): 54.68%
    Graham Number ÷ Previous Close: 72.25%

    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.

    If stocks are bought at reasonable valuations (with a good Margin of Safety) using a reliable framework such as Graham's, investors should have little to worry even from extreme market fluctuations.
    May 11, 2015. 03:52 PM | Likes Like |Link to Comment
  • 3 Dangerous And Misleading Quotes From Buffett And Templeton [View article]
    Buffett is simply outlining another application of Graham's Value Investing principles.

    Serenity's own 2+ year old article (http://seekingalpha.co...) recommends a Vanguard S&P500 index fund as a good application of Graham's first strategy for investors.
    May 10, 2015. 02:02 PM | Likes Like |Link to Comment
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