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  • SerenityStocks commented on Benjamin Clark's article 08-29 14:56
    10 Undervalued Companies for the Enterprising Dividend Stock Investor – August 2015
    There are a number of great companies in the market today. By using the ModernGraham Valuation Model, I've selected 10 undervalued companies for the...
    View all 1 comment
    SerenityStocks 08-29 15:56
    • 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 with this formula and only used it to demonstrate that the market's growth rate expectations were never reliable. But due to an omission in recent editions of The Intelligent Investor, this formula is often mistakenly used today to value stocks instead of Graham's actual (and more thorough) methods.

      Article: Understanding The Benjamin Graham Formula Correctly discusses the issue in detail.

      Graham's first recommended strategy - for novice investors - was to invest in Index stocks. 

      For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them. 

      For professional investors, Graham described various special situations or "workouts".

      For example, given below are the actual Graham ratings for KLA-Tencor Corp (KLAC), with no adjustments other than those for inflation.

      Defensive Graham investment requires that all ratings (except Equity ÷ Debt) be 100% or more. 

      Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, N/A, 50%, 5%, N/A and 137%.

      KLA-Tencor Corp (KLAC) - Defensive Graham Ratings

      Sales | Size (100% ⇒ $500 Million): 558.00%

      Current Assets ÷ [2 x Current Liabilities>: 255.97%

      Net Current Assets ÷ Long Term Debt: 493.45%

      Equity ÷ Debt (for Utilities and Financials): 196.36%

      Earnings Stability (100% ⇒ 10 Years): 50.00%

      Dividend Record (100% ⇒ 20 Years): 55.00%

      Earnings Growth (100% ⇒ 30% Growth): 126.64%

      Graham Number ÷ Previous Close: 90.93%

      Note: Stocks failing Graham's rules are not necessarily bad investments. They may fall under Graham's "special situations" category. Graham's rules are also extremely selective.
  • SerenityStocks commented on Thomas Macpherson's article 08-29 14:48
    What Knowledge Matters?
    In 1888, a Harvard professor in biology gave a speech at the Lowell Foundation about the abilities of species to survive and thrive in a constantly...
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    SerenityStocks 08-29 15:48
    • "If you can't explain it simply, you don't understand it well enough." - Albert Einstein



      You're absolutely right about Buffett and his fellow Superinvestors, Tom.

      Buffett once gave a talk at Columbia Business School describing how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The talk is now known as "The Superinvestors of Graham-and-Doddsville".

       
  • SerenityStocks commented on CanadianValue's article 08-29 14:45
    Long-term Contrarian / Value Investing: Turning an Oxymoron Into an Opportunity – Tocqueville Asset Management
    In my observation, there is more than one discipline that can lead to investment success, and some of the proven ones are quite different from each...
    View all 1 comment
    SerenityStocks 08-29 15:45
    • Benjamin Graham was a scholar and professional investor who mentored investing legends such as Warren Buffett (Trades, Portfolio), William J. Ruane, Irving Kahn and Walter J. Schloss.

      Warren Buffett (Trades, Portfolio) wrote the preface to Graham's book - The Intelligent Investor - in which he called it "by far the best book about investing ever written."

      Graham's first recommended strategy - for novice investors - was to invest in the stocks comprising an Index. 

      For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them. 

      For professional investors, Graham described various special situations or "workouts".

      The first requires almost no analysis, and is easily accomplished today with a good S&P500 Index fund.

      The last requires more than the average level of ability and experience. Such stocks are also not amenable to impartial algorithmic analysis, and require a case-specific approach.

      But Defensive, Enterprising and NCAV stocks can be reliably detected by today's data-mining software, and offer a great avenue for accurate automated analysis and profitable investment.

      Most of Buffett's investments are what Graham defined as Special Situations.

      Warren Buffett (Trades, Portfolio) once gave a talk at Columbia Business School describing how Graham's record of creating exceptional investors (such as Buffett himself) is unquestionable, and how Graham's principles are everlasting. The talk is now known as "The Superinvestors of Graham-and-Doddsville".
  • SerenityStocks commented on Benjamin Clark's article 08-23 12:01
    10 Undervalued Companies for the Defensive Dividend Stock Investor – August 2015
    There are a number of great companies in the market today. I've selected the highest dividend yields among the undervalued companies for defensive...
    View all 1 comment
    SerenityStocks 08-23 13:01
    • 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 with this formula and only used it to demonstrate that the market's growth rate expectations were never reliable. But due to an omission in recent editions of The Intelligent Investor, this formula is often mistakenly used today to value stocks instead of Graham's actual (and more thorough) methods.

      Article: Understanding The Benjamin Graham Formula Correctly discusses the issue in detail.

      Graham's first recommended strategy - for novice investors - was to invest in Index stocks. 

      For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them. 

      For professional investors, Graham described various special situations or "workouts".

      For example, given below are the actual Graham ratings for Qualcomm Inc (QCOM), with no adjustments other than those for inflation.

      Defensive Graham investment requires that all ratings (except Equity ÷ Debt) be 100% or more. 

      Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, N/A, 50%, 5%, N/A and 137%.

      Qualcomm Inc (QCOM) - Defensive Graham Ratings

      Sales | Size (100% ⇒ $500 Million): 5,498.00%

      Current Assets ÷ [2 x Current Liabilities>: 186.37%

      Net Current Assets ÷ Long Term Debt: 100.00%

      Equity ÷ Debt (for Utilities and Financials): 416.47%

      Earnings Stability (100% ⇒ 10 Years): 100.00%

      Dividend Record (100% ⇒ 20 Years): 65.00%

      Earnings Growth (100% ⇒ 30% Growth): 197.69%

      Graham Number ÷ Previous Close: 80.80%

      Note: Stocks failing Graham's rules are not necessarily bad investments. They may fall under Graham's "special situations" category. Graham's rules are also extremely selective.
  • SerenityStocks commented on Benjamin Clark's article 08-21 09:09
    10 Most Undervalued Companies for the Enterprising Investor – August 2015
    There are a number of great companies in the market today. By using the ModernGraham Valuation Model, I've selected the ten most undervalued...
    View all 1 comment
    SerenityStocks 08-21 10:09
    • 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 with this formula and only used it to demonstrate that the market's growth rate expectations were never reliable. But due to an omission in recent editions of The Intelligent Investor, this formula is often mistakenly used today to value stocks instead of Graham's actual (and more thorough) methods.

      Article: Understanding The Benjamin Graham Formula Correctly discusses the issue in detail.

      www.gurufocus.com/news/333226/understanding-the-benjamin-graham-formula-correctly

      Graham's first recommended strategy - for novice investors - was to invest in Index stocks. 

      For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them. 

      For professional investors, Graham described various special situations or "workouts".

      For example, given below are the actual Graham ratings for Valero Energy Corp (VLO), with no adjustments other than those for inflation.

      Defensive Graham investment requires that all ratings (except Equity ÷ Debt) be 100% or more. 

      Enterprising Graham investment requires minimum ratings of - N/A, 75%, 90%, N/A, 50%, 5%, N/A and 137%.

      Valero Energy Corp (VLO) - Defensive Graham Ratings

      Sales | Size (100% ⇒ $500 Million): 26,168.00%

      Current Assets ÷ [2 x Current Liabilities>: 83.24%

      Net Current Assets ÷ Long Term Debt: 114.78%

      Equity ÷ Debt (for Utilities and Financials): 83.13%

      Earnings Stability (100% ⇒ 10 Years): 50.00%

      Dividend Record (100% ⇒ 20 Years): 100.00%

      Earnings Growth (100% ⇒ 30% Growth): 48.67%

      Graham Number ÷ Previous Close: 101.43%

      Note: Stocks failing Graham's rules are not necessarily bad investments. They may fall under Graham's "special situations" category. Graham's rules are also extremely selective.
  • SerenityStocks commented on Nelson Hsu's article 08-21 09:04
    What Would Ben Graham Say About This Net-Net Stock?
    Solitron Devices Inc. (SODI) shares trade below Net Current Asset Value (NCAV), making it a Net-Net stock. The definition of a Net-Net is when market...
    View all 2 comments
    SerenityStocks 08-21 10:04
    • Benjamin Graham was a scholar and professional investor who mentored investing legends such as Warren Buffett (Trades, Portfolio), William J. Ruane, Irving Kahn and Walter J. Schloss.

      Warren Buffett (Trades, Portfolio) wrote the preface to Graham's book - The Intelligent Investor - in which he calls it "by far the best book about investing ever written."

      Graham's first recommended strategy - for novice investors - was to invest in Index stocks. 

      For more serious investors, Graham recommended three different categories of stocks - Defensive, Enterprising and NCAV - and 17 qualitative and quantitative rules for identifying them. 

      For professional investors, Graham described various special situations or "workouts".

      Net Current Asset Value / NCAV stocks are also known as Net-Nets or cigar-butt stocks today. Graham did recommend these stocks for Enterprising investors, but with additional qualitative checks and diversification requirements.

      Graham also recommended in The Intelligent Investor that an NCAV stock have a positive EPS figure to be eligible for investment.

      The positive EPS requirement is the qualitative check for NCAV stocks; and is - if you think about it - a very logical rule. There's really not much point buying a stock for its current assets (cash equivalents), if the company's losing money.

      Since NCAV stocks undergo the least qualitative tests of all of Graham's categories, they also require the most diversification. Graham recommended a portfolio size of 30 for NCAV stocks; or in other words, not more than 3.3% of one's portfolio per NCAV stock.
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