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GRAHAM NUMBER
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Gary:
Where did you come across this formula "the square root of....22.5 x eps x book value/share" ?
You are correct that most companies have far greater liabilities than assets. Only a few seem to pass the Graham's Number test, and even fewer when the market is strong.....sometimes the Graham Number screen returns no stocks.
Calculating the Graham's Number or Net-Net for large Blue Chips is not advisable; Graham only intended this strategy to be used for "Low-Priced Bargain Stocks".
Graham did have another strategy which he called "Relatively Unpopular Large Companies", where he basically looked for large well-established companies such as the Dow components that were out of favour for some reason, and had a low P/E. I prefer to use the BMW Method to find stocks in this category price-wise, and then do some due diligence on them to make sure they are fundamentally sound and just temporarily unpopular.
See this blog post for more details:
http://www.grahaminvestor.com/the-graham-investor-blog/archive/2006/02/04/the-relatively-unpopular-large-company
I hope this helps.
TGI
Where did you come across this formula "the square root of....22.5 x eps x book value/share" ?
You are correct that most companies have far greater liabilities than assets. Only a few seem to pass the Graham's Number test, and even fewer when the market is strong.....sometimes the Graham Number screen returns no stocks.
Calculating the Graham's Number or Net-Net for large Blue Chips is not advisable; Graham only intended this strategy to be used for "Low-Priced Bargain Stocks".
Graham did have another strategy which he called "Relatively Unpopular Large Companies", where he basically looked for large well-established companies such as the Dow components that were out of favour for some reason, and had a low P/E. I prefer to use the BMW Method to find stocks in this category price-wise, and then do some due diligence on them to make sure they are fundamentally sound and just temporarily unpopular.
See this blog post for more details:
http://www.grahaminvestor.com/the-graham-investor-blog/archive/2006/02/04/the-relatively-unpopular-large-company
I hope this helps.
TGI
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Simple Graham - at Stingy Investor.com
Forget about this. Most NACV stks are basket cases .
Stingy Investor.com has modern Graham screens.
Simple Graham - 10 times earnings or less
Less than 50% debt to equity
Go to Magic Formula Investing web site. Joel Greenblat value screens.
ADVFN.com has value screens.
Best to buy a value fund. Ben Graham was a genius.
This is hard work. Lots of value traps.
Forget about this. Most NACV stks are basket cases .
Stingy Investor.com has modern Graham screens.
Simple Graham - 10 times earnings or less
Less than 50% debt to equity
Go to Magic Formula Investing web site. Joel Greenblat value screens.
ADVFN.com has value screens.
Best to buy a value fund. Ben Graham was a genius.
This is hard work. Lots of value traps.
Current state:
Being created
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