Showing posts with label Benjamin Graham. Show all posts
Showing posts with label Benjamin Graham. Show all posts
Monday, December 1, 2008
Saturday, February 16, 2008
Graham’s investing philosophy
THE recent developments over the subprime issues and the big volatility in regional markets have caused a lot of uneasiness to retail investors.
According to Benjamin Graham (1894-1976), investors should make market fluctuations their friends, rather than get carried away by the market sentiment. Investors should not try to time the market, as the stock market movement is always unpredictable.
In this article, we will look into some key elements of Graham’s investing philosophy.
Graham, the father of value investing, was born in London and moved to the United States when he was eight years old. In 1914, he graduated from Columbia University and started work as a financial analyst on Wall Street.
He started a private investment organisation, the Benjamin Graham Joint Account, on Jan 1, 1926, which was later joined by Jerry Newman at end-1926.
According to Benjamin Graham (1894-1976), investors should make market fluctuations their friends, rather than get carried away by the market sentiment. Investors should not try to time the market, as the stock market movement is always unpredictable.
In this article, we will look into some key elements of Graham’s investing philosophy.
Graham, the father of value investing, was born in London and moved to the United States when he was eight years old. In 1914, he graduated from Columbia University and started work as a financial analyst on Wall Street.
He started a private investment organisation, the Benjamin Graham Joint Account, on Jan 1, 1926, which was later joined by Jerry Newman at end-1926.
Friday, November 23, 2007
My Hero, Benjamin Grossbaum
Benjamin Graham was born Benjamin Grossbaum on May 9, 1894, in London, and sailed to New York with his family before he was two. He attended New York City public schools and excelled at every subject except gym. He read constantly and forgot nothing—the kind of child we wish we had, or, indeed, had been ourselves. With the untimely death of his father, young Benjamin early learned to do without and to work. He entered Columbia College at 17 in the Class of 1914 and majored in mathematics.
For Graham, the life of the mind was inseparable from the life of finance. He was a fluent and adventurous writer. At one time or another, he tried his hand at poetry, playwrighting, translations, textbook writing and—the highest form of literature—financial journalism. In 1915, the New York Times published a letter to the editor under his name. The subject was the city's sinking fund, for which Graham had no use. He was 20 years old at the time and was posting quotations by hand on the chalk board of the New York Stock Exchange member firm of Newberger, Henderson & Loeb. Graham wrote not only for money—which he could certainly use at that stage of his career—but also for glory, such glory, for example, as a signed piece in the Magazine of Wall Street might afford.
The modern journalistic convention calls for an author on an investment subject to sprinkle his article with validating quotations from acknowledged authorities—brokerage-house analysts, for instance. There was none of that in Graham's pieces. He himself was the authority, and his topics ranged from bankruptcies and arbitrage to orphaned value stocks. In the summer of 1924, on the eve of the great Coolidge bull market, he identified eight stocks that, seemingly for no good reason, were quoted in the market at less than their pro rata share of net current assets. Then there were eight—in less than a decade, there would be hundreds.
Disclosure: Thanks to Sanjeev from MSN BRK shareholders board for the original reference.
For Graham, the life of the mind was inseparable from the life of finance. He was a fluent and adventurous writer. At one time or another, he tried his hand at poetry, playwrighting, translations, textbook writing and—the highest form of literature—financial journalism. In 1915, the New York Times published a letter to the editor under his name. The subject was the city's sinking fund, for which Graham had no use. He was 20 years old at the time and was posting quotations by hand on the chalk board of the New York Stock Exchange member firm of Newberger, Henderson & Loeb. Graham wrote not only for money—which he could certainly use at that stage of his career—but also for glory, such glory, for example, as a signed piece in the Magazine of Wall Street might afford.
The modern journalistic convention calls for an author on an investment subject to sprinkle his article with validating quotations from acknowledged authorities—brokerage-house analysts, for instance. There was none of that in Graham's pieces. He himself was the authority, and his topics ranged from bankruptcies and arbitrage to orphaned value stocks. In the summer of 1924, on the eve of the great Coolidge bull market, he identified eight stocks that, seemingly for no good reason, were quoted in the market at less than their pro rata share of net current assets. Then there were eight—in less than a decade, there would be hundreds.
Disclosure: Thanks to Sanjeev from MSN BRK shareholders board for the original reference.
Wednesday, August 15, 2007
Remembering a Classic Investing Theory
More than 70 years ago, two Columbia professors named Benjamin Graham and David L. Dodd came up with a simple investing idea that remains more influential than perhaps any other. In the wake of the stock market crash in 1929, they urged investors to focus on hard facts — like a company’s past earnings and the value of its assets — rather than trying to guess what the future would bring. A company with strong profits and a relatively low stock price was probably undervalued, they said.
Their classic 1934 textbook, “Security Analysis,” became the bible for what is now known as value investing. Warren E. Buffett took Mr. Graham’s course at Columbia Business School in the 1950s and, after working briefly for Mr. Graham’s investment firm, set out on his own to put the theories into practice. Mr. Buffett’s billions are just one part of the professors’ giant legacy.
Yet somehow, one of their big ideas about how to analyze stock prices has been almost entirely forgotten. The idea essentially reminds investors to focus on long-term trends and not to get caught up in the moment. Unfortunately, when you apply it to today’s stock market, you get even more nervous about what’s going on.
Most Wall Street analysts, of course, say there is nothing to be worried about, at least not beyond the mortgage market. In an effort to calm investors after the recent volatility, analysts have been arguing that stocks are not very expensive right now. The basis for this argument is the standard measure of the market: the price-to-earnings ratio.
Full Article
Their classic 1934 textbook, “Security Analysis,” became the bible for what is now known as value investing. Warren E. Buffett took Mr. Graham’s course at Columbia Business School in the 1950s and, after working briefly for Mr. Graham’s investment firm, set out on his own to put the theories into practice. Mr. Buffett’s billions are just one part of the professors’ giant legacy.
Yet somehow, one of their big ideas about how to analyze stock prices has been almost entirely forgotten. The idea essentially reminds investors to focus on long-term trends and not to get caught up in the moment. Unfortunately, when you apply it to today’s stock market, you get even more nervous about what’s going on.
Most Wall Street analysts, of course, say there is nothing to be worried about, at least not beyond the mortgage market. In an effort to calm investors after the recent volatility, analysts have been arguing that stocks are not very expensive right now. The basis for this argument is the standard measure of the market: the price-to-earnings ratio.
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