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  • Tracking Kahn Brothers Portfolio - Q3 2014 Update [View article]
    Benjamin Graham actually had such an overwhelming influence on his students that two of them - Warren Buffett and Irving Kahn - named their sons after Graham.

    Warren Buffett once wrote an article explaining how Benjamin Graham's principles are everlasting, their results irrefutable, and his students consistently exceptional. It's called "The Superinvestors of Graham-and-Doddsville". But most of what Graham actually taught has been forgotten today.

    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 the Graham ratings for Pfizer Inc (PFE).

    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%.

    Pfizer Inc - Defensive Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 10,316.00%
    Current Assets ÷ [2 x Current Liabilities]: 120.35%
    Net Current Assets ÷ Long Term Debt: 107.93%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 100.00%
    Earnings Growth (100% ⇒ 30% Growth): 104.88%
    Graham Number ÷ Previous Close: 75.56%

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

    Pfizer Inc - Final Graham Assessment
    Defensive Price (Graham Number): $22.61
    Enterprising Price (Serenity Number): $0.00
    NCAV Price: $-6.19
    Qualitative Result: Excellent / Defensive
    Intrinsic Value: $22.61
    Previous Close: $29.92
    Quantitative Result: 75.57%

    http://seekingalpha.co... shows how one can do a true 17-point Benjamin Graham assessment for 5000+ NYSE and NASDAQ stocks; with no modifications other than adjustments for inflation.
    Nov 8, 2014. 09:22 AM | 1 Like Like |Link to Comment
  • Abbvie Inc. Trading At A Deep Discount, But With Risks [View article]
    Before being checked against the Graham Number, Benjamin Graham required that a stock first meet six other qualitative criteria.

    For example, given below are the actual Graham ratings for Abbvie Inc (ABBV).

    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%.

    Abbvie Inc - Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 3,758.00%
    Current Assets ÷ [2 x Current Liabilities]: 129.73%
    Net Current Assets ÷ Long Term Debt: 76.76%
    Earnings Stability (100% ⇒ 10 Years): 20.00%
    Dividend Record (100% ⇒ 20 Years): 5.00%
    Earnings Growth (100% ⇒ 30% Growth): 0.00%
    Graham Number ÷ Previous Close: 22.14%

    Warren Buffett once wrote an article explaining how Benjamin Graham's principles are everlasting, their results irrefutable, and his students consistently exceptional. It's 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. Even when Graham's recommended methods are used, they are heavily modified - often beyond recognition - to clear the stocks, rather than having the stocks clear them.

    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.

    http://seekingalpha.co... explains how anyone can do an exact 17-point Benjamin Graham assessment for 5000+ NYSE and NASDAQ stocks; with no modifications other than adjustments for inflation.
    Nov 4, 2014. 08:45 AM | 1 Like Like |Link to Comment
  • Why You Need To Buy Cheap Stocks In 2015 [View article]
    While it's true that stock market speculation is no different from gambling, a true investment is actually a business operation.

    Benjamin Graham himself gave a very simple and clear definition for distinguishing between the investment and gambling:

    "An investment operation is one which, upon thorough analysis promises safety of principal and an adequate return. Operations not meeting these requirements are speculative."
    Chapter 1: Investment versus Speculation
    The Intelligent Investor, Benjamin Graham

    But most of what Graham actually taught has been forgotten today, and things he warned against are often attributed to him instead. 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, Graham also required NCAV stocks (or Net-Net stocks as they are popularly referred to) to also have positive TTM EPS figures.

    However, the simplistic NCAV stocks are only the most well-known of Graham's strategies, and the source of the general misconception that Graham recommended cheap stocks.

    Graham actually 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.

    http://seekingalpha.co... shows how to do a true 17-point Benjamin Graham assessment for 5000+ NYSE and NASDAQ stocks; with no modifications other than adjustments for inflation.
    Oct 27, 2014. 05:10 PM | 1 Like Like |Link to Comment
  • Dow Chemical Company Quarterly Stock Valuation [View article]
    Actually, since this article does not mention the Benjamin Graham formula, it has not been alluded to in Serenity's comment either. But perhaps it should be addressed, since the ModernGraham website lists the formula as one of the evaluation methods it uses.

    Intrinsic Value = EPS x (8.5 + 2xGrowth)

    Benjamin Graham gave the following warnings with 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 mentions this formula to demonstrate why such oversimplified growth estimates are unreliable. This formula is popular only due to a printing omission in recent editions of The Intelligent Investor.

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

    On the other hand, Graham distinctly recommended the methods in the unmistakably named "Stock Selection" chapters. The article mentioned in the previous comment is about those methods.
    Oct 21, 2014. 05:40 PM | 1 Like Like |Link to Comment
  • 5 More Undervalued Companies For The Defensive Investor To Research [View article]
    Intrinsic Value = EPS x (8.5 + 2xGrowth)

    Benjamin Graham gave the following warnings with 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 mentions this formula to demonstrate why such oversimplified growth estimates are unreliable. This formula is popular only due to a printing omission in recent editions of The Intelligent Investor.

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

    Warren Buffett once wrote an article explaining how Benjamin Graham's principles are everlasting, their results irrefutable, and his students consistently exceptional. It's 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 criteria. 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 Coach Inc (COH).

    Defensive Graham investment requires all the ratings to be at least 100%.
    Enterprising Graham investment requires the ratings to be at least - CA/2CL : 75%, NCA/LTD : 90%, EPS Stability: 50%, Div Record: 5% and GN/PC: 137%.

    Coach Inc - Defensive Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 1,016.00%
    Current Assets ÷ [2 x Current Liabilities]: 143.31%
    Net Current Assets ÷ Long Term Debt: 269,680.00%
    Earnings Stability (100% ⇒ 10 Years): 100.00%
    Dividend Record (100% ⇒ 20 Years): 25.00%
    Earnings Growth (100% ⇒ 30% Growth): 253.72%
    Graham Number ÷ Previous Close: 73.14%

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

    Coach Inc - Final Graham Assessment
    Defensive Price (Graham Number): $25.23
    Enterprising Price (Serenity Number): $16.94
    NCAV Price: $3.36
    Qualitative Result: Good / Enterprising
    Intrinsic Value: $16.94
    Previous Close: $34.49
    Quantitative Result: 49.12%

    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.

    Article 2: http://seekingalpha.co... shows how to do a true 17-point Benjamin Graham assessment for 5000+ NYSE and NASDAQ stocks; with no modifications other than adjustments for inflation.
    Oct 19, 2014. 04:13 PM | 1 Like Like |Link to Comment
  • For Buy-And-Hold Investors, It's Really Hard To Lose Money In The Stock Market (Part I) [View article]
    Absolutely, Minutemen.

    Nice work on the article!
    Oct 15, 2014. 01:35 PM | 1 Like Like |Link to Comment
  • For Buy-And-Hold Investors, It's Really Hard To Lose Money In The Stock Market (Part I) [View article]
    The idea is "buy and hold", not "hold forever".

    The stock market took 25 years to recover from the crash of 1929.
    To have held on to all equity investments at such market levels would have been foolhardy.

    Graham advocated varying one's holdings between 25% and 75% depending on market levels.
    75% in stocks in undervalued markets.
    75% in bonds in overvalued ones.

    The idea of "buy and hold" is to buy stocks for investment, not speculation.
    That includes selling them once they exceed their calculated worth.
    Oct 15, 2014. 07:51 AM | 1 Like Like |Link to Comment
  • For Buy-And-Hold Investors, It's Really Hard To Lose Money In The Stock Market (Part I) [View article]
    Great topic and very nicely covered!

    In a 2012 article, Serenity too had recommended VFINX as one of the investments Benjamin Graham might have recommended:

    Article 1: How To Build A Complete Benjamin Graham Portfolio
    http://seekingalpha.co...
    (see "Strategy 1: Zero Effort - Index Funds")

    Graham often emphasized that most mutual funds did not beat the market average, as measured by the indices. He thus recommended that the first strategy for any investor - one that required nearly no effort - was to proportionally invest in stocks listed in the indices. This is something that can be done a lot more easily today, by simply investing in an index fund.

    Warren Buffett once wrote an article explaining how Benjamin Graham's principles are everlasting, their results irrefutable, and his followers consistently exceptional. It's 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.
    Even when Graham's recommended methods are used, they are heavily modified - often beyond recognition - to fit the stocks, rather than having stocks clear them.

    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.

    He also spent nearly 50 years developing and backtesting the 17 rules in his investment framework; a framework that has been repeatedly endorsed by some of the world's most successful investors.

    Article 2: http://seekingalpha.co... shows how to do an exact 17-point Benjamin Graham assessment for 5000+ NYSE and NASDAQ stocks; with no modifications other than adjustments for inflation.
    Oct 14, 2014. 04:53 PM | 1 Like Like |Link to Comment
  • Vanguard Natural Resources: Valuation Targets Price At $20 [View article]
    Hello Bryce_in_TX,

    This article was not published by Serenity Stocks.

    The numbers applied on Serenity Stocks are all the same ones Graham recommends - EPS, BVPS, TVBPS etc.

    Graham spent nearly 50 years developing and backtesting the 17 rules in his investment framework; a framework that has been repeatedly endorsed by some of the world's most successful investors, especially Warren Buffett.

    The article, however, applies only a very small part of his framework and applies that very wrongly.

    VNR may or may not be a good investment. It just doesn't clear Graham's rules.
    Oct 10, 2014. 04:44 PM | 1 Like Like |Link to Comment
  • Splunk: Price Matters [View article]
    Benjamin 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 type of stock in his investment framework.

    For example, given below are the actual Graham ratings for Splunk Inc (SPLK).

    Defensive Graham investment requires all the ratings to be at least 100%.
    Enterprising Graham investment requires the ratings to be at least - CA/2CL : 75%, NCA/LTD : 90%, EPS Stability: 50%, Div Record: 5% and GN/PC: 137%.

    Splunk Inc - Defensive Graham Ratings
    Sales | Size (100% ⇒ $500 Million): 60.52%
    Current Assets ÷ [2 x Current Liabilities]: 238.77%
    Net Current Assets ÷ Long Term Debt: 100.00%
    Earnings Stability (100% ⇒ 10 Years): 0.00%
    Dividend Record (100% ⇒ 20 Years): 0.00%
    Earnings Growth (100% ⇒ 30% Growth): 0.00%
    Graham Number ÷ Previous Close: 0.00%

    Warren Buffett himself once wrote an article explaining how Benjamin Graham's principles are everlasting, their results irrefutable, and his followers consistently exceptional. It's 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.

    Even when Graham's recommended methods are used, they are modified - often beyond recognition - to fit the stocks, rather than having stocks clear them.

    Article 1: http://seekingalpha.co... shows how to do an exact 17-point Benjamin Graham assessment for 5000+ NYSE and NASDAQ stocks; with no alterations other than adjustments for inflation.
    Oct 10, 2014. 10:14 AM | 1 Like Like |Link to Comment
  • AT&T Inc.: Well Positioned And Trading Below Fair Value [View article]
    Before being checked against the Graham Number, Benjamin Graham required that a stock first meet 6 other qualitative criteria.

    For example, given below are the actual 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 - CA/2CL : 75%, NCA/LTD : 90%, EPS Stability: 50%, Div Record: 5% and GN/PC: 137%.

    AT&T Inc. (T) - Defensive 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: 74.93%

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

    But most of what Graham actually taught has been forgotten today, or is used wrongly.
    The Graham Number is a great example.

    Even when Graham's recommended methods are used, they are often modified beyond recognition to fit the stocks, rather than having stocks clear them.

    http://seekingalpha.co... shows how to do an 17-point Benjamin Graham assessment for 5000+ NYSE and NASDAQ stocks; with no deviations other than adjustments for inflation.
    Oct 8, 2014. 10:43 AM | 1 Like Like |Link to Comment
  • 5 More Companies For Defensive Investors With Low PE Ratios [View article]
    Graham gives the following warnings with 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".

    On the other hand, he distinctly recommends the methods in the unmistakably named "Stock Selection" chapters.

    The two articles mentioned in the first comment have references, page numbers and scans of the relevant pages.

    Thank you.
    Sep 28, 2014. 10:11 AM | 1 Like Like |Link to Comment
  • 5 More Companies For Defensive Investors With Low PE Ratios [View article]
    Intrinsic Value = EPS x (8.5 + 2xGrowth)

    Benjamin Graham actually gave several warnings about this formula and only used it to show why such oversimplified growth estimates are unreliable. This formula is popular only due to a printing omission in recent editions of The Intelligent Investor.

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

    Warren Buffett once wrote an article explaining how Benjamin Graham's principles are everlasting, their results irrefutable, and his followers consistently exceptional. It's called the 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 often heavily modified to fit the stocks rather than having stocks meet 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 ensuring adequate size of Defensive stocks. Using market capitalization instead will - all other things being equal - rate overvalued stocks higher than for undervalued ones.

    The below criteria from the article too are all extremely different from what Graham recommended:
    Dividend Record - has paid a dividend for at least 10 straight years.
    Moderate PEmg ratio (price over normalized earnings) - PEmg is less than 20
    Moderate Price to Assets - PB ratio is less than 2.5 or PB x PEmg is less than 50.

    Graham actually 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 criteria for each category of stocks.

    For example, given below are the actual 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 - CA/2CL : 75%, NCA/LTD : 90%, EPS Stability: 50%, Div Record: 5% and GN/PC: 137%.

    Mattel Inc - Defensive 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: 70.51%

    The Final Graham Assessment for Mattel Inc is also given below.
    The Quantitative Result (Graham Price ÷ Previous Close) for a stock has to be 100% for true Graham investment.

    Mattel Inc - Final Graham Assessment
    Defensive Price (Graham Number): $21.72
    Enterprising Price (Serenity Number): $11.35
    NCAV Price: $0.56
    Qualitative Result: Excellent / Defensive
    Graham Price: $21.72
    Previous Close: $30.81
    Quantitative Result: 70.50%

    Graham spent nearly 50 years developing and backtesting the 17 rules in his investment framework; a framework that has been repeatedly endorsed by some of the world's most successful investors.

    Article 2: http://seekingalpha.co... shows how to do an actual 17-point Benjamin Graham assessment for 5000 NYSE and NASDAQ stocks; with no changes other than adjustments for inflation.
    Sep 27, 2014. 11:51 AM | 1 Like Like |Link to Comment
  • 5 Undervalued Companies For The Enterprising Investor Near 52-Week Lows [View article]
    Dear Readers,

    Graham gives these warnings with this formula:
    1. "Warning: This material is supplied for illustrative purposes only".
    2. "Note that we do not suggest that this formula gives the “true value” of a growth stock".
    3. "Let the reader not be misled into thinking that such projections have any high degree of reliability".

    On the other hand, he unequivocally recommends the methods in the two Stock Selection chapters.

    The two articles mentioned in the previous comment have references, page numbers and scans of the relevant pages.

    Thank you!
    Aug 14, 2014. 10:22 AM | 1 Like Like |Link to Comment
  • 5 Undervalued Companies For The Defensive Investor With High Dividend Yields [View article]
    Dear Readers,

    The two articles linked to in the previous comment include all required references and scans.
    Please go through them and decide for yourself what Graham actually taught, and what he warned against.

    Thank you.
    Jul 26, 2014. 10:23 AM | 1 Like Like |Link to Comment
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