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  • Ben Graham's Explanation For The Dividend Champions' Premium Valuation [View article]
    Good article! But as some of the other readers pointed out, Benjamin Graham also specified requirements for Earnings growth and gave Margin of Safety calculations for the multiples an investor should stay within.

    In all, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - with 17 different qualitative and quantitative criteria for finding them.

    For example, given below are the actual Graham ratings for Hershey and Sherwin-Williams.

    Defensive Graham investment requires all the ratings to be at least 100%.
    Enterprising Graham investment requires the ratings to be at least - CA/CL : 75%, CA/LTD : 90%, EPS Stability: 50%, Div Record: 5% and GN/Price: 137%.

    The Hershey Company (NYSE:HSY) - Defensive Graham Ratings
    Sales | Size: 1,430.00%
    Current Assets ÷ Current Liabilities: 88.33%
    Current Assets ÷ Long Term Debt: 60.12%
    Earnings Stability: 100.00%
    Dividend Record: 100.00%
    Earnings Growth: 111.05%
    Graham Number ÷ Current Price: 19.44%

    The Sherwin-Williams Company (NYSE:SHW) - Defensive Graham Ratings
    Sales | Size: 2,038.00%
    Current Assets ÷ Current Liabilities: 62.46%
    Current Assets ÷ Long Term Debt: 56.14%
    Earnings Stability: 100.00%
    Dividend Record: 100.00%
    Earnings Growth: 133.04%
    Graham Number ÷ Current Price: 10.46%

    http://seekingalpha.co... discusses Graham's actual 17 stock selection criteria and shows how to apply them to 5000 NYSE & NASDAQ stocks today.
    Aug 9, 2014. 10:34 PM | 3 Likes Like |Link to Comment
  • How To Invest In A Deep Value Investment Opportunity In 3 Easy Steps: Load Caza Oil & Gas, Sit, And Wait [View article]
    It seems to be quite common to refer to Value Investing and Benjamin Graham in an analysis these days, without actually using any of the principles or criteria that Graham actually recommended.

    Benjamin Graham recommended three different grades of stocks for investment - Defensive, Enterprising and NCAV - and sixteen criteria for finding them.

    http://seekingalpha.co... lists all sixteen of the criteria Graham recommended in The Intelligent Investor, and gives step-by-step instructions on how to find stocks that meet them.

    http://seekingalpha.co... describes the kind of oversimplified analysis commonly attributed to Graham, and how Graham specifically warned against such shortcuts.
    May 15, 2014. 04:21 PM | 3 Likes Like |Link to Comment
  • Invest In Stocks With A Margin Of Safety To Reduce Risk And Enhance Returns [View article]
    Hello Chuck,

    That's a great point you make about understanding the reasoning behind the Graham's principles before implementing them.
    But is it really a good idea to ignore Graham's methods while trying to follow his principles?

    Graham wrote his books in the period between 1934 to 1973.
    By then:

    1. IBM and Xerox had been already speculators' favorites for decades (by 1973).
    2. NYSE had been around for 150 years (from 1817 or earlier).
    3. Stock Markets had been around for 350 years (starting with the Amsterdam Stock Exchange in 1602).

    So Graham already had centuries of Stock Market history to teach with.
    Technology and International Trade were ubiquitous, intangibles were common in balance sheets, and Graham referred to them all in his books quite often.

    Graham even taught that companies could have more earnings with fewer assets. That's why Graham's most common intrinsic value calculation - the Graham Number - is a function of (Book Value x Earnings); so that a higher value in one compensates for a lower value in the other.

    Warren Buffett describes himself as 85% Graham and 15% Phil Fisher, and refers to Graham's book - The Intelligent Investor - as "by far the best book about investing ever written".

    Wouldn't it be a good idea to get Buffett's 85% right first - and use Graham's methods when they are so clearly written down - before worrying about how to do the remaining 15%?
    Sep 18, 2013. 08:08 AM | 3 Likes Like |Link to Comment
  • Would Benjamin Graham Like HollyFrontier? [View article]
    HollyFrontier Corp (HFC) has been paying uninterrupted dividends for dividends for the last 20 years (from 1994 to 2013).

    Serenity's automated screeners also currently list Weis Markets Inc (WMK) and Helmerich & Payne Inc (HP) as stocks that clear all the above Defensive criteria specified by Graham.
    May 31, 2013. 07:20 AM | 3 Likes Like |Link to Comment
  • Why Benjamin Graham Investors Can Ignore What 'Research' Says [View article]
    Benjamin Graham actually taught that the returns an investor could expect were not proportional to the risk he was willing to assume, but rather, to the effort he was willing to put into his investments.

    Quoted from "General Portfolio Policy: The Defensive Investor" of The Intelligent Investor:

    "It has been an old and sound principle that those who cannot afford to take risks should be content with a relatively low return on their invested funds. From this 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."

    And from Warren Buffett's Preface to The Intelligent Investor:

    "Whether you achieve outstanding results will depend on the effort and intellect you apply to your investments, as well as on the amplitudes of stock-market folly that prevail during your investing career"

    More details on Graham strategies on http://seekingalpha.co...
    Apr 12, 2013. 09:16 AM | 3 Likes Like |Link to Comment
  • This Benjamin Graham Rule Encourages More Disciplined Investing [View article]
    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."

    From Chapter 15 of The Intelligent Investor - Stock Selection for the Enterprising Investor:
    "issues selling at P/E multipliers under 10"
    Jan 2, 2013. 03:51 AM | 3 Likes Like |Link to Comment
  • 4 Quick Picks For The Benjamin Graham Defensive Investor [View article]
    This article looks very similar to:

    "A Unique List Of Fully Defensive Graham Stocks"
    http://seekingalpha.co...

    Was the latest list of Defensive stocks taken from Serenity's screener?
    If so, kindly credit Serenity for the same.
    Thank you!

    For the full Graham investment strategy, see:

    "How To Build A Complete Benjamin Graham Portfolio"
    http://seekingalpha.co...

    --
    Serenity Stocks
    Jan 1, 2013. 09:37 AM | 3 Likes Like |Link to Comment
  • How To Build A Complete Benjamin Graham Portfolio [View article]
    Hello Amerlafrance,

    The lists/tables shown here are screenshots.
    To click on a link, you need to go to the actual screener on Serenity.
    Link: http://bit.ly/QYCMaj

    INTC has a very low P/E to compensate for the high P/B. So its Graham Number, which is a combination of EPS and Book value, is more than its current price.
    The Graham Number in this case is eligible for consideration since INTC meets all the other Defensive Criteria.

    --
    Serenity Stocks
    Nov 29, 2012. 10:28 PM | 3 Likes Like |Link to Comment
  • How To Build A Complete Benjamin Graham Portfolio [View article]
    Their unpopularity with analysts actually shows that the stocks have been selected well, dunnhaupt.

    Quoting from The Intelligent Investor:

    "Readers of this book, however intelligent and knowing, could scarcely expect to do a better job of portfolio selection than the top analysts of the country. But if it is true that a fairly large segment of the stock market is often discriminated against or entirely neglected in the standard analytical selections, then the intelligent investor may be in a position to profit from the resultant undervaluations.
    But to do so he must follow specific methods that are not generally accepted on Wall Street, since those that are so accepted do not seem to produce the results everyone would like to achieve. It would be rather strange if—with all the brains at work professionally in the stock market—there could be approaches which are both sound and relatively unpopular. Yet our own career and reputation have been based on this unlikely fact."

    The reason Graham and his followers do better than others is because they do things others don't.

    --
    Serenity Stocks
    Nov 29, 2012. 09:14 PM | 3 Likes Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Motorola Solutions Inc. [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 used it to demonstrate why most growth-based valuations are unreliable. But due to a printing omission in recent editions of The Intelligent Investor, this formula is used often today instead of Graham's actual (and more comprehensive) 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 Motorola Solutions Inc (MSI), with no adjustments other than those for inflation.

    Defensive Graham investment requires all the ratings to be at least 100%.
    Enterprising Graham investment requires the ratings to be at least - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Motorola Solutions Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 1,740.00%
    Current Assets ÷ [2 x Current Liabilities]: 109.01%
    Net Current Assets ÷ Long Term Debt: 154.66%
    Earnings Stability (100% ⇒ 10 Years): 40.00%
    Dividend Record (100% ⇒ 20 Years): 15.00%
    Earnings Growth (100% ⇒ 30% Growth): 24.74%
    Graham Number ÷ Previous Close: 48.11%

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

    Article 2: http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar exact Benjamin Graham assessment, with no adjustments other than those for inflation.
    Jan 26, 2015. 12:08 PM | 2 Likes Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Baxter International [View article]
    The ModernGraham website lists the following formula as one of the evaluation methods it uses:

    Intrinsic Value = EPS x (8.5 + 2xGrowth)

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

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

    Most of what Graham actually taught has been forgotten today, or is applied incorrectly.

    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 other things being equal - rate overvalued stocks higher than undervalued ones. Other rules mentioned here too - such as dividend record, and PE & PB ratios - are all very different from what Graham actually recommended.

    Graham spent nearly 50 years developing, backtesting and refining an investment framework that has withstood the test of time, and has been endorsed by some of the world's most successful investors. Modifying Graham's rules so heavily seems very ill-advised.

    Given below are the actual Graham ratings for Baxter International Inc (BAX), with no modifications other than adjustments for inflation.

    Defensive Graham investment requires all the ratings to be at least 100%.
    Enterprising Graham investment requires the ratings to be at least - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Baxter International Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 3,052.00%
    Current Assets ÷ [2 x Current Liabilities]: 84.69%
    Net Current Assets ÷ Long Term Debt: 50.41%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 211.31%
    Graham Number ÷ Previous Close: 51.38%

    Article 2: http://seekingalpha.co... shows how one can screen 5000+ NYSE and NASDAQ stocks, by a similar exact Benjamin Graham assessment.
    Nov 30, 2014. 03:28 PM | 2 Likes Like |Link to Comment
  • Investing For Beginners With Benjamin Graham [View article]
    Thank you, Drvenikmerlot!

    Graham's 17-point stock selection framework is a system of checks and balances designed to analyze any equity based investment (regardless of industry).

    So stocks from sectors with lower Earnings are required to have more Assets, and vice versa.
    Stocks of poorer quality - or of questionable history - are required to provide a greater "Margin of Safety" by way of Assets and Earnings.

    REITs are inherently equity based instruments, with all the same risks that come with buying stocks.
    So they should be evaluated by Graham's 17-point framework just the same as any other stock.

    REITs don't generally score too well on the Graham framework and that's probably to be expected because businesses have historically been better investments than real estate (or anything else, for that matter).

    The biggest draw of REITs appears to be the combination of high dividends and price volatility.
    REITs are therefore seen as a great avenue for small scale speculation in real estate.

    Graham has always been very clear that speculation is never a feasible long-term strategy.
    Nov 26, 2014. 03:29 PM | 2 Likes Like |Link to Comment
  • Mattel Has Huge Margin Of Safety For Dividend Investors [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.

    Graham emphasized that the secret of sound investment was the "Margin of Safety". He recommended various categories of stocks - Defensive, Enterprising and NCAV - and specified precise qualitative and quantitative rules for each category.

    For example, given below are all Graham ratings for Mattel Inc (MAT).

    Defensive Graham investment requires all the ratings to be at least 100%.
    Enterprising Graham investment requires the ratings to be at least - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Mattel Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 1,296.00%
    Current Assets ÷ [2 x Current Liabilities]: 161.26%
    Net Current Assets ÷ Long Term Debt: 145.66%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 136.44%
    Graham Number ÷ Previous Close: 69.88%

    Mattel Inc ranks very highly by Graham's qualitative rules, but exceeds Graham's quantitative limits.

    Warren Buffett once wrote an article describing how Graham's principles are everlasting, and his students consistently exceptional. The article is called "The Superinvestors of Graham-and-Doddsville".

    http://seekingalpha.co... shows how anyone can do a true 17-point Benjamin Graham assessment for 5000+ NYSE and NASDAQ stocks; with no adjustments other than those for inflation.
    Nov 21, 2014. 03:09 PM | 2 Likes Like |Link to Comment
  • Why Halliburton Stock Is A Good Investment Opportunity [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.

    Graham emphasized that the secret of sound investment was the "Margin of Safety". He recommended various categories of stocks - Defensive, Enterprising and NCAV - and specified precise qualitative and quantitative rules for each category.

    For example, given below are all Graham ratings for Halliburton Company (HAL).

    Defensive Graham investment requires all the ratings to be at least 100%.
    Enterprising Graham investment requires the ratings to be at least - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    Halliburton Company - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 5,880.00%
    Current Assets ÷ [2 x Current Liabilities]: 136.33%
    Net Current Assets ÷ Long Term Debt: 111.03%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 144.68%
    Graham Number ÷ Previous Close: 69.05%

    Halliburton Company ranks very highly by Graham's qualitative rules.

    Warren Buffett once wrote an article describing how Graham's principles are everlasting, and his students consistently exceptional. The article is called "The Superinvestors of Graham-and-Doddsville".

    http://seekingalpha.co... shows how anyone can do a true 17-point Benjamin Graham assessment for 5000+ NYSE and NASDAQ stocks; with no adjustments other than those for inflation.
    Nov 21, 2014. 01:21 PM | 2 Likes Like |Link to Comment
  • Dividend Aristocrats In Focus Part 39: AT&T [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.

    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".

    Graham recommended various categories of stocks - Index, Defensive, Enterprising and NCAV. He emphasized that the secret of sound investment was the "Margin of Safety", and specified precise qualitative and quantitative rules for each category.

    For example, given below are all Graham ratings for AT&T Inc (T).

    Defensive Graham investment requires all the ratings to be at least 100%.
    Enterprising Graham investment requires the ratings to be at least - N/A, 75%, 90%, 50%, 5%, N/A and 137%.

    AT&T Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 25,750.00%
    Current Assets ÷ [2 x Current Liabilities]: 33.14%
    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): 85.40%
    Graham Number ÷ Previous Close: 74.85%

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

    http://seekingalpha.co... shows how anyone can do a true 17-point Benjamin Graham assessment for 5000+ NYSE and NASDAQ stocks; with no adjustments other than those for inflation.
    Nov 20, 2014. 12:56 PM | 2 Likes Like |Link to Comment
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