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The Essence of the Graham and Dodd Philosophy

That is to buy stocks almost as if they were bonds. The investment value metric that we use is basically a BOND metric.

Bill Gross of Pimco has observed that the investment return on stocks in the 20th century was dividends, plus inflation, plus 0.6% a year real. Put another way, U.S. blue chip stocks are glorifed TIPs (Treasury Inflation Protection Securities)

Around the turn of the century, stock yields of less than 2% were less than real TIP yields of nearly 3%. That's why stocks have done nothing for a decade, cause they weren't competitive on a risk adjusted basis.

The relationship is more reasonable now, with stock yields just "wide" of Treasury yields, and way above TIP yields. The respective yield premiums are now meaningful (many stocks beat straight bonds on inflation protection, and TIPs on yields).

Even so, we feel much better with a stock that has a dividend, providing some  income. Then it is much like a straight bond. If dividends are non-existent, then investment value is just equal to book value. Then we try to buy such as stock as if it is a zero coupon bond; at as deep a discount as possible, like we did with Ashland Chemical (NYSE:ASH) earlier this year.