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His work in equity research laid the foundation for the in-depth fundamental valuations used by market participants today in stock market analysis. His classic book "The Intelligent Investor" is widely regarded as the foundation of value investing.
His work in equity research laid the foundation for the in-depth fundamental valuations used by market participants today in stock market analysis. His classic book "The Intelligent Investor" is widely regarded as the foundation of value investing.
Benjamin Graham was born in London, England in 1894. When he was young, his family immigrated to the United States and lost all their savings in the 1907 bank panic. Graham attended Columbia University on a scholarship and accepted a job offer from Wall Street firm Newburger, Henderson, and Loeb after graduation.
By the age of 25, his annual income reached approximately $500,000. However, the 1929 stock market crash caused him to lose almost all of his investments, and the experience also taught him valuable lessons about the world of investing. His observations after the crash inspired him to co-write the book Security Analysis with David Dodd. The famous American investor Irving Kahn also contributed to the research content of the book.
Benjamin Graham is considered the founder of stock analysis, especially value investing. According to Graham and Dodd, value investing involves deriving the intrinsic value of a common stock and comparing it to the market value of the stock without relying on market price. Intrinsic value can be determined through a company's financial fundamentals, including:
If the intrinsic value is higher than the current price, investors should buy and hold until the market returns to the mean. Mean reversion theory holds that market price and intrinsic price converge with each other over time until the stock price reflects its true value. By purchasing an undervalued stock, investors pay a price below its true value and then sell it when the price reaches its intrinsic value.
This price convergence effect occurs only in efficient markets. Graham was a strong supporter of efficient markets. If the market is not efficient, value investing loses its meaning: the basic principle of value investing is that the market can eventually correct to intrinsic value.
Despite investors' irrational behavior in the market, ordinary stocks will not remain overvalued or undervalued forever.
Graham noted that due to factors such as irrational investor behavior and the inability to predict the future and stock market volatility, buying undervalued or unpopular stocks can provide investors with a margin of safetythat is, room for human error.
Alternatively, investors can achieve a margin of safety by purchasing shares of companies with high dividend yields and low debt ratios and diversifying their portfolios. This margin of safety will mitigate investors' losses if a company goes bankrupt. Graham typically trades stocks at two-thirds of their net worth as a cushion of safety margin.
The original Graham formula for finding the intrinsic value of a stock is:
<!-- @@@ -->In 1974, the formula was revised to include a risk-free rate of 4.4%, which was the average return on high-grade corporate bonds in 1962, and the letter Y to represent the current return on AAA corporate bonds:
<!-- @@@ -->"Security Analysis" was first published in 1934, at the beginning of the Great Depression, when Graham was a lecturer at Columbia Business School. This book lays out the basic framework for value investing, which involves buying undervalued stocks with the potential for long-term growth. In an era when the stock market was regarded as a speculative tool, the concepts of intrinsic value and margin of safety first proposed in "Security Analysis" opened the way for basic stock analysis without speculative factors.
In 1949, Graham wrote the acclaimed "The Intelligent Investor: The Definitive Book on Value Investing." The book is widely considered the value investor's bible and introduces a character called "Mr. Market," a metaphor Graham used to visualize how market prices work.
Mr. Market is the investor's fictitious business partner who attempts to sell or buy his shares every day at different prices, often related to his mood. Of course, investors are not required to accept any buy or sell quotes.
Graham noted that investors should not rely on day-to-day market sentiment driven by investor sentiment (greed and fear) but should instead analyze a stock's value based on a company's operations and financials. This analysis should enhance investors' judgment when faced with Mr. Market's quotes.
According to Graham, smart investors sell to optimists and buy from pessimists. Investors should pay close attention to differences between price and value due to recessions, market crashes, one-time events, temporary negative publicity and human error, looking for opportunities to buy low and sell high. If there are no such opportunities, investors should ignore the market noise.
While reaffirming the fundamental principles in Securities Analysis, The Intelligent Investor also advises investors by:
It is worth mentioning that Warren Buffett is an outstanding disciple of Benjamin Graham. Buffett was Graham's student at Columbia University and worked for Graham's company, Graham-Newman Corporation, after graduation until Graham retired. Under the guidance of Graham and his value investing principles, Buffett became one of the most successful investors in history. As of January 2024, his wealth reached approximately US$120.6 billion, ranking eighth in the world. Other important investors who studied and worked under Graham included Irving Kahn, Christopher Browne, and Walter Schloss.
Although Benjamin Graham passed away in 1976, his work is still widely used by value investors and financial analysts who still conduct fundamental research based on a company's value and growth prospects.
The Graham and Dodd Award was established in memory of former Columbia University finance professors Benjamin Graham and David Dodd to recognize excellence in research and financial writing at the Financial Analysts Journal.
Benjamin Graham is a renowned value investor, lecturer, financial securities researcher, and mentor to billionaire investor Warren Buffett. As the "Father of Investment", Graham has written many books, among which "The Intelligent Investor" is widely regarded as the bible of value investors.
Benjamin Graham's key investing principles include:
Benjamin Graham, known as the "Father of Value Investing," is renowned for his unique investing style, literary contributions and research in the investment field. He taught classes at his alma mater, Columbia University, where he eventually became a professor of finance. His classic book "The Intelligent Investor" introduced the concept of value investing to the financial and investment community and defined many of the investment principles used by famous investors around the world.
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1974年，该公式被修订，加入了4.4%的无风险利率，这是1962年高等级企业债券的平均收益，并用字母Y表示当前AAA企业债券的收益：
他在证券研究方面的工作为如今市场参与者在股市分析中所采用的深入基本面估值奠定了基础。他的经典著作《聪明的投资者》被广泛认为是价值投资的奠基之作。
本杰明·格雷厄姆于1894年出生于英国伦敦。年幼时，他的家人移居美国，在1907年的银行恐慌中失去了所有积蓄。格雷厄姆凭借奖学金进入哥伦比亚大学，并在毕业后接受了华尔街公司Newburger, Henderson, and Loeb的工作邀请。
到25岁时，他年收入已达到约50万美元。然而，1929年股市崩盘几乎让他失去了所有的投资，这次经历也让他获得了关于投资世界的宝贵教训。他在崩盘后的观察激励他与戴维·多德合写了《证券分析》一书。美国著名投资者欧文·卡恩（Irving Kahn）也为该书的研究内容作出了贡献。
本杰明·格雷厄姆被视为股票分析，尤其是价值投资的创始人。根据格雷厄姆和多德的说法，价值投资是指在不依赖市场价格的情况下，推导出普通股的内在价值，并将其与股票的市场价值进行比较。内在价值可以通过公司的财务基本面来确定，包括：
如果内在价值高于当前价格，投资者应当买入并持有，直至市场回归均值。均值回归理论认为，随着时间推移，市场价格和内在价格会彼此趋同，直至股价反映其真实价值。通过购买被低估的股票，投资者以低于其真实价值的价格买入，待价格达到内在价值时再出售。
这种价格趋同的效果只会在高效市场中发生。格雷厄姆是高效市场的坚定支持者。如果市场不高效，价值投资就失去了意义：价值投资的基本原则在于市场最终能够纠正到内在价值。
尽管投资者在市场中存在非理性行为，普通股票也不会永远保持被高估或被低估的状态。
格雷厄姆指出，由于投资者的非理性行为以及无法预测未来和股市波动等因素，购买被低估或不受欢迎的股票可以为投资者提供安全边际即为人为错误留出余地。
另外，投资者也可以通过购买高股息收益率且低负债率的公司的股票以及分散投资组合来实现安全边际。如果一家公司破产，这种安全边际将减轻投资者的损失。格雷厄姆通常以其净值的三分之二交易的股票作为安全边际的缓冲。
寻找股票内在价值的最初格雷厄姆公式为：
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