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  • Why I'm Now More Of A Buffett And Munger Type Investor [View article]
    It's a common misconception that Benjamin Graham's framework was only quantitative.

    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 very first strategy Graham recommended was to buy the 30 stocks of the Dow (which, as Graham noted, would include expensive growth stocks).
    It doesn't get any more qualitative, and less quantitative, than that.

    Buying "High Quality Stocks and Businesses at reasonable prices" is very much a part of Graham's Value Investing.

    Article: "Is Warren Buffett A Value Investor?" (http://seekingalpha.co...) discusses the topic in detail.

    The oldschoolvalue website also cites a variation of 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 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.
    Jun 30, 2015. 07:05 AM | 1 Like Like |Link to Comment
  • Book Review: Strategic Value Investing [View article]
    Nice review!

    It's interesting that most such material these days discusses everything about Value Investing other than the person who actually invented it, and what he taught.

    Benjamin Graham - also known as 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 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".

    Warren Buffett once gave a speech at Columbia Business School explaining how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The speech is known as "The Superinvestors of Graham-and-Doddsville".
    Jun 29, 2015. 05:32 PM | Likes Like |Link to Comment
  • What The Sudden Wave Of IPOs Mean For The Stock Market [View article]
    Graham also wrote:
    "Our one recommendation is that all investors should be wary of new issues—which means, simply, that these should be subjected to careful examination and unusually severe tests before they are purchased.
    There are two reasons for this double caveat. The first is that new issues have special salesmanship behind them, which calls therefore for a special degree of sales resistance. The second is that most new issues are sold under “favorable market conditions”— which means favorable for the seller and consequently less favorable for the buyer."
    Jun 28, 2015. 06:19 PM | 1 Like Like |Link to Comment
  • Best S&P 500 Industrial Stocks According To Buffett Principles: A Look At Jacobs Engineering [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 once gave a speech at Columbia Business School explaining how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The speech is now known as "The Superinvestors of Graham-and-Doddsville".

    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 Jacobs Engineering Group Inc (JEC), 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%.

    Jacobs Engineering Group Inc (JEC) - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 2,562.00%
    Current Assets ÷ [2 x Current Liabilities]: 82.81%
    Net Current Assets ÷ Long Term Debt: 201.83%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 0.00%
    Earnings Growth (100% ⇒ 30% Growth): 127.72%
    Graham Number ÷ Previous Close: 109.65%

    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.

    Most of Buffett's investments are what Graham defined as Special Situations.
    Jun 25, 2015. 10:28 AM | Likes Like |Link to Comment
  • Bank Of America Should Trade For Book Value [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 once gave a speech at Columbia Business School explaining how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The speech is now known as "The Superinvestors of Graham-and-Doddsville".

    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 Bank of America Corporation (BAC), 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%.

    Bank of America Corporation (BAC) - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 16,170.00%
    Current Assets ÷ [2 x Current Liabilities]: 2.09%
    Net Current Assets ÷ Long Term Debt: 0.00%
    Earnings Stability (100% ⇒ 10 Years): 40.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 9.93%
    Graham Number ÷ Previous Close: 89.38%

    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.

    Most of Buffett's investments are what Graham defined as Special Situations.
    Jun 24, 2015. 07:14 AM | 2 Likes Like |Link to Comment
  • Investing In A Sleep Well At Night REIT Like Warren Buffett [View article]
    Sir John Templeton once said:
    "The four most dangerous words in investing are: 'this time it's different.'"

    Financial stocks and REITs do report balance sheets differently. The
    original comment does mention that stocks failing Graham's rules are
    not necessarily bad investments. They may fall under Graham's "special
    situations" category.

    In such cases, Defensive Graham Ratings give an overall picture
    of a stock's Margin of Safety.

    Thank you for your comment, charliezap!
    Jun 24, 2015. 07:05 AM | Likes Like |Link to Comment
  • CF Industries Has Great Potential For Value Investors [View article]
    Thank you for your comment, 209773671!
    Jun 23, 2015. 05:27 PM | Likes Like |Link to Comment
  • CF Industries Has Great Potential For Value Investors [View article]
    Thank you, TxGolfer57!
    Jun 23, 2015. 04:51 PM | 1 Like Like |Link to Comment
  • CF Industries Has Great Potential For Value Investors [View article]
    Hello 209773671,

    Thank you for your comment!

    The articles all apply the same rules to different stocks. The comments too therefore all point out the valid and invalid modifications to the rules, what Graham actually taught, and the warnings he gave about the formula.

    The information is provided to give readers an alternate point of view (something seekingalpha encourages) so that readers can make the best possible decision for themselves.

    Serenity has published multiple articles on this subject - each addressing a specific aspect of Benjamin Graham's principles and Value Investing.

    Thank you!
    Jun 23, 2015. 03:34 PM | 2 Likes Like |Link to Comment
  • Investing In A Sleep Well At Night REIT Like Warren Buffett [View article]
    Hello charliezap,

    > canned approach such as the Graham rules

    Actually, the article does refer to Graham and one of his rules (20 years of dividends). Serenity's analysis just applies all 17 Graham rules (Defensive, Enterprising and NCAV).

    The article also refers to Graham's "Margin of Safety" principle, but doesn't actually use Graham's Margin of Safety calculations. So it seemed appropriate to provide the above analysis.

    Graham's framework is designed to be sector independent, and comes very highly recommended. But his rules are extremely selective and very few stocks clear them. That's precisely why they give great results.

    But Graham's framework is also unpopular for the same reason; because very few stocks fare well against it.

    Thank you for your comment!
    Jun 23, 2015. 03:09 PM | Likes Like |Link to Comment
  • CF Industries Has Great Potential 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 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 also recommended a company of "Not less than $100 million of annual sales" for the Defensive investor. Checking for Market Capitalization instead will - all else being equal - rate overvalued stocks better than undervalued ones.

    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 CF Industries Holdings Inc (CF), 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%.

    CF Industries Holdings Inc (CF) - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 948.00%
    Current Assets ÷ [2 x Current Liabilities]: 133.42%
    Net Current Assets ÷ Long Term Debt: 35.60%
    Earnings Stability (100% ⇒ 10 Years): 90.00%
    Dividend Record (100% ⇒ 20 Years): 55.00%
    Earnings Growth (100% ⇒ 30% Growth): 568.03%
    Graham Number ÷ Previous Close: 363.67%

    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.
    Jun 21, 2015. 06:12 PM | 4 Likes Like |Link to Comment
  • Zimmer Holdings Is A Strong 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 also recommended a company of "Not less than $100 million of annual sales" for the Defensive investor. Checking for Market Capitalization instead will - all else being equal - rate overvalued stocks better than undervalued ones.

    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 Zimmer Holdings Inc (ZMH), 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%.

    Zimmer Holdings Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 934.00%
    Current Assets ÷ [2 x Current Liabilities]: 110.71%
    Net Current Assets ÷ Long Term Debt: 18.36%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 20.00%
    Earnings Growth (100% ⇒ 30% Growth): 73.66%
    Graham Number ÷ Previous Close: 26.23%

    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.
    Jun 20, 2015. 06:09 PM | Likes Like |Link to Comment
  • Investing In A Sleep Well At Night REIT Like Warren Buffett [View article]
    Benjamin 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.

    For example, given below are the actual Defensive Graham Ratings for Urstadt Biddle Properties Inc (UBA), 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%.

    Urstadt Biddle Properties Inc - Defensive Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 21.45%
    Current Assets ÷ [2 x Current Liabilities]: 0.00%
    Net Current Assets ÷ Long Term Debt: 0.00%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 90.00%
    Earnings Growth (100% ⇒ 30% Growth): 66.93%
    Graham Number ÷ Previous Close: 62.83%

    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.
    Jun 20, 2015. 02:41 PM | Likes Like |Link to Comment
  • Is Cisco Undervalued? [View article]
    The Graham formula the article is referring to is a variation of the following:
    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 Cisco Systems Inc (CSCO), 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%.

    Cisco Systems Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 9,616.00%
    Current Assets ÷ [2 x Current Liabilities]: 169.40%
    Net Current Assets ÷ Long Term Debt: 231.88%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 25.00%
    Earnings Growth (100% ⇒ 30% Growth): 124.87%
    Graham Number ÷ Previous Close: 68.90%

    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.
    Jun 19, 2015. 05:49 PM | 1 Like Like |Link to Comment
  • Analog Devices Is A Great Company But Currently 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 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 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.

    Another 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 better than undervalued ones.

    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".

    For example, given below are the actual Graham ratings for Analog Devices Inc (ADI), 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%.

    Analog Devices Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 602.00%
    Current Assets ÷ [2 x Current Liabilities]: 268.83%
    Net Current Assets ÷ Long Term Debt: 355.44%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 65.00%
    Earnings Growth (100% ⇒ 30% Growth): 117.13%
    Graham Number ÷ Previous Close: 39.41%

    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.
    Jun 19, 2015. 05:37 PM | Likes Like |Link to Comment
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