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  • 4 Graphs Of Warren Buffett's Top Bets [View article]
    What if you're into the value investing principles laid out by Benjamin Graham in The Intelligent Investor, do want to pick your stocks, and don't have to read five years of financial statements?

    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".

    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.

    For example, given below are the actual Graham ratings for International Business Machines Corp (IBM), 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%.

    International Business Machines Corp - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 18,558.60%
    Current Assets ÷ [2 x Current Liabilities]: 62.40%
    Net Current Assets ÷ Long Term Debt: 28.00%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 172.99%
    Graham Number ÷ Previous Close: 35.81%

    Not all stocks failing Graham's rules are necessarily bad investments. They may fall under "special situations". 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".

    Buffett wrote in the article:
    "Size is the anchor of performance. There is no question about it. It doesn’t mean you can’t do better than average when you get larger, but the margin shrinks."

    The size of Buffett's investments limits his options. Almost all of Buffett's transactions are "special situations". The ordinary retail investor has far better options out there to follow Buffett's/Graham's principles.

    Thank you.
    Apr 30, 2015. 04:36 PM | Likes Like |Link to Comment
  • Beating The Market Is Simple, But Not Easy [View article]
    Buffett also explained the same principle, in layman's terms:
    "Lethargy, bordering on sloth should remain the cornerstone of an investment style."

    There are still plenty of true NCAV stocks to be found.

    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.

    The NCAV valuation method was indeed developed and recommended by Benjamin Graham. But Graham also recommended in The Intelligent Investor that an NCAV stock 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.

    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.

    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 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.

    Article: Investing For Beginners With Benjamin Graham (http://seekingalpha.co...) has more details.
    Apr 30, 2015. 04:16 PM | 1 Like Like |Link to Comment
  • That Silly Mr. Market [View article]
    Businesses are answerable to their stockholders and sell whatever sells best.

    Till consumers start becoming more discerning, businesses will continue to sell sugar water, story stocks and target prices.
    Apr 30, 2015. 03:28 PM | Likes Like |Link to Comment
  • That Silly Mr. Market [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.

    As far as convictions go, Graham taught:
    "You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right."

    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".

    For example, given below are the actual Graham ratings for Kohl's Corp (KSS), 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%.

    Kohl's Corp - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 3,757.00%
    Current Assets ÷ [2 x Current Liabilities]: 96.71%
    Net Current Assets ÷ Long Term Debt: 54.13%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 20.00%
    Earnings Growth (100% ⇒ 30% Growth): 123.47%
    Graham Number ÷ Previous Close: 71.27%

    Not all stocks failing Graham's rules are necessarily bad investments. They may fall under "special situations". 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".

    Buffett concluded the article writing:
    "Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace, and those who read their Graham & Dodd will continue to prosper."

    Thank you.
    Apr 30, 2015. 03:22 PM | 1 Like Like |Link to Comment
  • ​Value Investing Fact And Fiction - Does Cheap Beat Expensive? [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 did advise never having more than 10% of one's portfolio in a single stock, even if the stock were of defensive investment quality.

    But if the principal amount is not significant, then it makes sense to focus one's research on just a few stocks. Excessive diversification does compromise quality of research.

    The market also does generally pay too much of a premium for good news.
    One does fare better with cheap, unpopular stocks.

    The real question is: cheap+decent vs just plain cheap.

    Cheap stocks are the domain of pure bargain hunting.
    Graham advocated true value investing: quality+quantity at a fair price.

    Article: True Value Investing Includes Quality And Growth (http://seekingalpha.co...) has a more detailed explanation.

    Also not too sure about the sections on momentum, and on small caps.
    "The Relatively Unpopular Large Company" was a Graham favorite.

    But otherwise, a very interesting read. Thank you.
    Apr 30, 2015. 03:09 PM | Likes Like |Link to Comment
  • The Different Types Of Value Stocks [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.

    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 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.

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

    Apple Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 39,960.00%
    Current Assets ÷ [2 x Current Liabilities]: 54.01%
    Net Current Assets ÷ Long Term Debt: 17.54%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 20.00%
    Earnings Growth (100% ⇒ 30% Growth): 1,243.48%
    Graham Number ÷ Previous Close: 40.03%

    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 30, 2015. 02:56 PM | Likes Like |Link to Comment
  • Cameco - A Value Investing Analysis [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.

    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 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.

    For example, given below are the actual Graham ratings for Cameco Corp (CCJ), 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%.

    Cameco Corp - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 381.00%
    Current Assets ÷ [2 x Current Liabilities]: 200.56%
    Net Current Assets ÷ Long Term Debt: 104.10%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 95.00%
    Earnings Growth (100% ⇒ 30% Growth): 53.70%
    Graham Number ÷ Previous Close: 73.69%

    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 30, 2015. 02:48 PM | 1 Like Like |Link to Comment
  • Berkshire: Is Now A Good Time To Buy? [View article]
    That one was understandable, hiphophez.

    This is the one you really need to see:
    http://seekingalpha.co...
    Apr 30, 2015. 02:25 PM | Likes Like |Link to Comment
  • 7 High-Conviction Stock Picks Held By The Masters Of The Universe [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".

    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.

    For example, given below are the actual Graham ratings for International Business Machines Corp (IBM), 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%.

    International Business Machines Corp - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 18,558.60%
    Current Assets ÷ [2 x Current Liabilities]: 62.40%
    Net Current Assets ÷ Long Term Debt: 28.00%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 172.99%
    Graham Number ÷ Previous Close: 35.81%

    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 28, 2015. 01:15 PM | 1 Like Like |Link to Comment
  • Annual Valuation Of Darden Restaurants [View article]
    Nice work with the metrics!

    Here're some numbers based on what Graham himself recommended.

    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 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.

    For example, given below are the actual Graham ratings for Darden Restaurants Inc (DRI), 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%.

    Darden Restaurants Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 1,284.60%
    Current Assets ÷ [2 x Current Liabilities]: 61.03%
    Net Current Assets ÷ Long Term Debt: 14.09%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 125.92%
    Graham Number ÷ Previous Close: 49.56%

    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 27, 2015. 05:23 PM | 2 Likes Like |Link to Comment
  • Book Review: The Bogleheads' Guide To Investing [View article]
    Just more evidence that when we study the methods of most successful investors, we see similar principles expressed and applied in different ways.

    Buffett himself once said of laziness:
    "Lethargy, bordering on sloth should remain the cornerstone of an investment style."

    And the first strategy recommended by Buffett's mentor - Benjamin Graham - for casual investors, was to invest in Index stocks; today's equivalent of which would be an Index fund.
    Apr 27, 2015. 05:17 PM | Likes Like |Link to Comment
  • Book Review: The Bogleheads' Guide To Investing [View article]
    Nicely said, Hardog!
    Apr 27, 2015. 05:10 PM | Likes Like |Link to Comment
  • Understanding The Benjamin Graham Formula Correctly [View article]
    Better left unsaid, Hardog :-)
    Apr 27, 2015. 04:03 PM | Likes Like |Link to Comment
  • Understanding The Benjamin Graham Formula Correctly [View article]
    Thank you for your comment, Bazz White.
    Many fantastic - and even occasionally absurd - investing strategies become popular over short periods.

    As Buffett says:
    "Only when the tide goes out do you discover who's been swimming naked."

    But before a strategy is applied to significant investments, it needs to be proven to fare well across decades of market cycles.
    Apr 27, 2015. 07:36 AM | Likes Like |Link to Comment
  • Understanding The Benjamin Graham Formula Correctly [View article]
    Thank you for your comment, valuinvstr99.

    From Chapter 14 of The Intelligent Investor - Stock Selection for the Defensive Investor:
    "6. Current price should not be more than 15 times average earnings of the past three years."

    The Graham Number on Serenity is thus calculated using the average EPS of the last three years, as Graham intended.
    But this is something else that is rarely followed today.

    For better or for worse, Serenity tries to follow Graham's principles to the letter (apart from adjustments for inflation).
    Apr 27, 2015. 07:32 AM | Likes Like |Link to Comment
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