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  • ModernGraham Quarterly Valuation Of Cigna 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 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 Cigna Corporation (CI), 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%.

    Cigna Corporation - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 6,476.00%
    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): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 127.55%
    Graham Number ÷ Previous Close: 65.57%

    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.

    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 28, 2015. 04:51 PM | 1 Like Like |Link to Comment
  • LeapFrog Is Selling Below Its Liquidation Value [View article]
    Graham's framework is designed to - among other things - identify troubled companies that are excessively undervalued by the market. Graham also designed his framework to work regardless of industry or business model.

    But if you're looking for a great business that has no problems and is also selling at great prices, good luck!
    Jan 28, 2015. 03:11 PM | 1 Like Like |Link to Comment
  • 225 Value Stocks Ready For Review [View article]
    Dear pim69,

    You know what they say about opinions.
    Why depend on what anybody else says?

    There are two articles linked to in the previous comment.

    The first article cites the pages (with scans) where Graham warns against this growth formula.

    The second article cites the chapters where Graham elaborates on his actual methods for stock selection.

    Why not just get a copy of The Intelligent Investor and verify the references for yourself?

    The book also has the preface by Warren Buffett, as well as Buffett's article "The Superinvestors of Graham-and-Doddsville" given as an appendix. Both make for great reading!

    Thank you.
    Jan 22, 2015. 01:59 PM | 1 Like Like |Link to Comment
  • 225 Value Stocks Ready For Review [View article]
    The link in the above article cites the following as the "Graham formula" 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.

    Graham spent nearly 50 years developing, backtesting and refining his investment framework; a framework that has withstood the test of time and has been endorsed by some of the world's most successful investors.

    For example, given below are the actual Graham ratings for Snap-on Incorporated (SNA), 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%.

    Snap-on Incorporated - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 612.00%
    Current Assets ÷ [2 x Current Liabilities]: 125.54%
    Net Current Assets ÷ Long Term Debt: 125.84%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 263.97%
    Graham Number ÷ Previous Close: 50.73%

    The Final Graham Assessment for Snap-on Incorporated is also given below.
    The Quantitative Result (Intrinsic Value ÷ Previous Close) for a stock has to be 100% for true Graham investment.

    Snap-on Incorporated - Final Graham Assessment
    Defensive Price (Graham Number): $67.25
    Enterprising Price (Serenity Number): $37.10
    NCAV Price: $-3.45
    Qualitative Result: Excellent / Defensive
    Intrinsic Value: $67.25
    Previous Close: $132.56
    Quantitative Result: 50.73%

    Please note that not all stocks failing Graham's rules are necessarily bad investments. Graham's rules are just extremely selective. It's more a question of how to get the "best" long-term results.

    Article 2: http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by a similar 17-point Benjamin Graham assessment, with no adjustments other than those for inflation.
    Jan 21, 2015. 11:09 AM | 1 Like Like |Link to Comment
  • Johnson & Johnson 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 Johnson & Johnson (JNJ).

    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%.

    Johnson & Johnson - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 14,262.00%
    Current Assets ÷ [2 x Current Liabilities]: 109.85%
    Net Current Assets ÷ Long Term Debt: 230.58%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 96.48%
    Graham Number ÷ Previous Close: 48.94%

    The Final Graham Assessment for Johnson & Johnson is also given below.
    The Quantitative Result (Intrinsic Value ÷ Previous Close) for a stock has to be 100% for true Graham investment.

    Johnson & Johnson - Final Graham Assessment
    Defensive Price (Graham Number): $50.55
    Enterprising Price (Serenity Number): $22.77
    NCAV Price: $-0.79
    Qualitative Result: Good / Enterprising
    Intrinsic Value: $22.77
    Previous Close: $103.28
    Quantitative Result: 22.05%

    This does not imply that stocks not clearing Graham's rules are always bad investments. Graham's rules are just extremely selective. It's more a question of how to get the "best" long-term results.

    Graham spent nearly 50 years developing, backtesting and refining his investment framework; a framework that has withstood the test of time and has been endorsed by some of the world's most successful investors.

    http://seekingalpha.co... shows how one can assess 5000+ NYSE and NASDAQ stocks by an exact Benjamin Graham assessment, with no adjustments other than those for inflation.
    Jan 7, 2015. 03:25 PM | 1 Like Like |Link to Comment
  • FutureFuel Poised For Strong Rebound [View article]
    For a more complete Benjamin Graham analysis, Future Fuel Corporation can also be checked against Graham's Enterprising and NCAV criteria (as well as the more accurately inflation-adjusted $500 million in sales).

    Given below are all the Graham ratings for Future Fuel Corporation (FF), 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%.

    Future Fuel Corporation - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 88.98%
    Current Assets ÷ [2 x Current Liabilities]: 350.62%
    Net Current Assets ÷ Long Term Debt: 100.00%
    Earnings Stability (100% ⇒ 10 Years): 80.00%
    Dividend Record (100% ⇒ 20 Years): 15.00%
    Earnings Growth (100% ⇒ 30% Growth): 908.83%
    Graham Number ÷ Previous Close: 103.50%

    The Final Graham Assessment for Future Fuel Corporation is also given below.
    The Quantitative Result (Intrinsic Value ÷ Previous Close) for a stock has to be 100% for true Graham investment.

    Future Fuel Corporation - Final Graham Assessment
    Defensive Price (Graham Number): $13.48
    Enterprising Price (Serenity Number): $11.76
    NCAV Price: $4.55
    Qualitative Result: Good / Enterprising
    Intrinsic Value: $11.76
    Previous Close: $13.02
    Quantitative Result: 90.32%

    Article 2: http://seekingalpha.co... shows how one can check 5000+ NYSE and NASDAQ for a similar exact Benjamin Graham assessment, with no adjustments other than those for inflation.
    Dec 27, 2014. 11:10 AM | 1 Like Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Oracle [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.

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

    Another example, again 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 Oracle Corp (ORCL), 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%.

    Oracle Corp - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 7,436.00%
    Current Assets ÷ [2 x Current Liabilities]: 161.95%
    Net Current Assets ÷ Long Term Debt: 155.83%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 25.00%
    Earnings Growth (100% ⇒ 30% Growth): 274.01%
    Graham Number ÷ Previous Close: 46.02%

    The Final Graham Assessment for Oracle Corp is also given below.
    The Quantitative Result (Intrinsic Value ÷ Previous Close) for a stock has to be 100% for true Graham investment.

    Oracle Corp - Final Graham Assessment
    Defensive Price (Graham Number): $21.22
    Enterprising Price (Serenity Number): $8.14
    NCAV Price: $0.97
    Qualitative Result: Good / Enterprising
    Intrinsic Value: $8.14
    Previous Close: $46.10
    Quantitative Result: 17.66%

    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.
    Dec 27, 2014. 11:03 AM | 1 Like Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Automatic Data Processing [View article]
    Hello DeJagen,

    ADP does not clear any one set of Graham's investment criteria completely; i.e., it's overvalued.

    The Final Graham Assessment for Automatic Data Processing (ADP) is given below.
    Defensive Price (Graham Number): $29.31
    Enterprising Price (Serenity Number): $13.64
    NCAV Price: $0.25
    Qualitative Result: Bargain / NCAV
    Intrinsic Value: $0.25
    Previous Close: $84.71
    Quantitative Result: 0.30%

    The Intrinsic Value for a Defensive quality stock equals its Defensive Price (Graham Number), the Intrinsic Value of an Enterprising quality stock equals its Enterprising Price and the Intrinsic Value for an NCAV quality stock equals its NCAV Price.

    According to Graham, a stock is undervalued below its Intrinsic Value and overvalued above its Intrinsic Value.

    But please note that this does not imply that all stocks not clearing Graham's rules are bad investments. Graham's rules are just extremely selective. It's more a question of how to get the "best" long-term results.

    Thank you.
    Dec 22, 2014. 04:09 PM | 1 Like Like |Link to Comment
  • ModernGraham Quarterly Valuation Of Automatic Data Processing [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.

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

    Another example, again 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 Automatic Data Processing (ADP), 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%.

    Automatic Data Processing - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 2,262.00%
    Current Assets ÷ [2 x Current Liabilities]: 52.97%
    Net Current Assets ÷ Long Term Debt: 9,987.76%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 123.37%
    Graham Number ÷ Previous Close: 34.60%

    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.
    Dec 21, 2014. 01:01 PM | 1 Like Like |Link to Comment
  • Investing For Beginners With Benjamin Graham [View article]
    Hello frrizzo380,

    You could be right.
    But do consider these facts as well.

    Irving Kahn and Walter Schloss never worked with Munger.
    But they too were students of Graham (Kahn named his son after Graham too, just as Buffett did).

    The quote you mention was attributed to Buffett by Carol J. Loomis in a 1988 Fortune magazine article. Buffett may have said that.

    But what Buffett definitely did write himself is a lengthy article in 1984 describing how Benjamin Graham's principles are everlasting, and how the only common factor across the world's most successful investors is Graham. 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.
    The article, the preface, and Buffett's eulogy to Graham are all available in any copy of the Intelligent Investor even today.

    George Soros once said "Good investing is boring". The reverse is true as well.
    Convoluted techniques of analysis sound impressive and sell copy, even if they don't actually work.

    Buffett tends to be surrounded by folklore, and Graham, by misconceptions.
    In general, it pays to focus more on what they wrote themselves, than on what is written about them.

    You already seem to have found the instablog post about this topic at http://seekingalpha.co...
    That post has a more detailed discussion. You will receive a more detailed reply to your comment there as well.

    Thank you for your comments!
    Dec 1, 2014. 03:23 PM | 1 Like Like |Link to Comment
  • Investing For Beginners With Benjamin Graham [View article]
    Hello MacKay Dave,

    Thank you for asking!

    You will probably notice such a trend in a lot of stocks that clear Graham's criteria.

    Graham's principles directly contradict most of the common practices in Technical Analysis. The fact that the stock has been on a downtrend is probably a good indication that you're applying Graham correctly.

    Given below is a relevant excerpt from the Introduction to The Intelligent Investor:

    "Since our book is not addressed to speculators, it is not meant for those who trade in the market. Most of these people are guided by charts or other largely mechanical means of determining the right moments to buy and sell. The one principle that applies to nearly all these so-called “technical approaches” is that one should buy because a stock or the market has gone up and one should sell because it has declined. This is the exact opposite of sound business sense everywhere else, and it is most unlikely that it can lead to lasting success on Wall Street. In our own stock-market experience and observation, extending over 50 years, we have not known a single person who has consistently or lastingly made money by thus “following the market.” We do not hesitate to declare that this approach is as fallacious as it is popular. "

    Graham's recommendation is, essentially, to ignore such trends.
    Nov 27, 2014. 08:00 AM | 1 Like Like |Link to Comment
  • Fluor: Industrial Construction Company Getting Rave Reviews [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 the actual Graham ratings for Fluor Corporation (FLR).

    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%.

    Fluor Corporation - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 5,470.00%
    Current Assets ÷ [2 x Current Liabilities]: 88.10%
    Net Current Assets ÷ Long Term Debt: 522.86%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 65.00%
    Earnings Growth (100% ⇒ 30% Growth): 197.61%
    Graham Number ÷ Previous Close: 60.42%

    Fluor Corporation ranks well by Graham's qualitative rules, but exceeds Graham's quantitative limits.

    Warren Buffett once wrote an article describing how Benjamin Graham's long record of tutoring exceptional investors (such as Buffett himself) is irrefutable. The article is called "The Superinvestors of Graham-and-Doddsville".

    http://seekingalpha.co... shows how anyone can screen 5000+ NYSE and NASDAQ stocks today, by an exact 17-point Benjamin Graham assessment.
    Nov 24, 2014. 03:26 PM | 1 Like Like |Link to Comment
  • ModernGraham Annual Valuation Of American Electric Power Company Inc. [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 the following warnings about this formula:
    1. "Warning: This material is supplied for illustrative purposes only".
    2. "Let the reader not be misled into thinking that such projections have any high degree of reliability".
    3. "Note that we do not suggest that this formula gives the “true value” of a growth stock".

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

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

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

    But most of what Graham actually taught has been forgotten today, and things he warned against are often attributed to him instead. The above formula is just one example. Even when Graham's recommended methods are used, they are heavily modified - often beyond recognition - to clear the stocks, rather than having stocks clear them.

    For example:
    "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 will - all other things being equal - rate overvalued stocks higher than undervalued ones.

    Even the other rules mentioned here - such as dividend record, and PE & PB ratios - are all very different from what Graham actually recommended.

    Given below are the actual Graham ratings for American Electric Power (AEP).

    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%.

    American Electric Power - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 3,072.00%
    Current Assets ÷ [2 x Current Liabilities]: 35.26%
    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): 96.97%
    Graham Number ÷ Previous Close: 88.02%

    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.

    Article 2: 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. 03:30 PM | 1 Like Like |Link to Comment
  • Universal Corporation Is Set To Outperform [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 - Index, Defensive, Enterprising and NCAV - and specified precise qualitative and quantitative rules for each category.

    For example, given below are all Graham ratings for Universal Corporation (UVV).

    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%.

    Universal Corporation - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 508.00%
    Current Assets ÷ [2 x Current Liabilities]: 183.87%
    Net Current Assets ÷ Long Term Debt: 507.58%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 142.00%
    Graham Number ÷ Previous Close: 175.23%

    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.

    In short, of 5000+ stocks analyzed using Graham's 17 rules today, Universal Corporation is one of the highest rated. Possibly, "the" highest.

    Thank you.
    Nov 21, 2014. 01:09 PM | 1 Like Like |Link to Comment
  • Is Exxon Mobil Stock A Buy Right Now? [View article]
    Thank you for the disclosure, charliezap.
    That's quite a story!

    Warren Buffett wrote "The Superinvestors of Graham-and-Doddsville" describing how Graham's principles are everlasting, in 1984 (30 years ago).

    Also, given below is part of the conclusion from the study "The Evolution of the Idea of Value Investing: From Benjamin Graham to Warren Buffett" by Robert F. Bierig, Duke University:

    "A [casual] observer of Buffett today would find it difficult to see the Ben Graham influence in many of his activities. However, that influence remains at the core of Buffett's investment model. Buffett continues to think about stocks as fractional ownership interests in underlying businesses, he continues to operate under the assumption that there is a distinction between price and value, and he continues to search for the largest discrepancy between those two items. In other words, he continues to be a value investor."

    NCAV stocks are the most well-known of 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 of them were allowed higher Quantitative valuations and required greater Qualitative checks than NCAV stocks.

    Graham did advocate paying more for Quality. His only prerequisite was that there be the Margin of Safety between price and value, whether the value be Qualitative or Quantitative.

    Also, the earlier comment that was not meant to imply that all stocks not clearing Graham's rules are bad! There are many schools of thought one can follow to invest successfully.

    Graham's rules are just extremely selective, that's all. Even for a stock that doesn't clear them, the Graham ratings gives a point of reference as to how the stock compares against others.

    Thank you.
    Nov 21, 2014. 11:01 AM | 1 Like Like |Link to Comment
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