Benjamin Graham, author of the investing tome The Intelligent Investor advocated buying stocks trading at less than their net working assets (cash in the bank minus any debts). In theory, this sounds great but very few stocks trade that cheaply anymore, apart from scandalous small caps alledgedly with accounting frauds.
One of Benjamin Graham’s investment criteria instructs conservative investors to avoid trading stocks trading above 1.5x their book value. If one would have followed this advice, in the last decade they would hold nothing but a few insurance and bank stocks.
Just before Graham died in 1976 he was asked if detailed fundamental analysis of stocks (a technique he became famous for) was still a favorable investment strategy, his exact words were -
“In general, no. I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding experience, say. 40 years ago, when our textbook [The Intelligent Investor] was first published. But the situation has changed a great deal since then."
Submitted August 11, 2021 at 10:13AM by hedonova https://ift.tt/3jO7Co6
