benjamin graham investment strategy

Intelligent Investor: Chapter 15

November 29, 2020 by Laxman Sonale 3 Comments

Hello friend, in today’s article we see chapter 15 of the intelligent investor book. In this chapter, benjamin gram discusses the enterprising investor criteria. These criteria help you to become an enterprising investor in-stock selection. Let’s see chapter 15 of the intelligent investor book.

Previous Chapter 14

6 Criteria for the stock selection:-Intelligent Investor: Chapter 15

Strong financial condition: Each and every investor those are a defensive investor or an enterprising investor sees the strong financial condition of the company. This condition helps you to boost your confidence about the investment, so check for a strong financial condition. (Intelligent Investor: Chapter 15)
Earning Stability: Enterprising investors also check the earning stability and this earning increase by 5 % in a positive way. For this purpose, you can consider the previous year’s earnings.
Dividend Record: Great investor of all time warren buffet says, ” Your investment principle gets from the dividend, and with this dividend, you can invest in other companies. all your investment money comes in dividend form, so check for the dividend record. “
Earnings Growth: with a dividend record enterprising investors also check for the earning per share i.e. earning growth. This EPS increased by 4% in these years as compared to the previous year.
Moderate P/E ratio: You can also for the price-earning ratio. this ratio is not more than 15. If your price-earning ratio is more than 15 so don’t buy that company’s stocks. This type of company takes money from the investor for the trading event. this type of event can be changed every time. (Intelligent Investor: Chapter 15)
Moderate P/B ratio: enterprising investors also check for the price-book ratio. this ratio is not more than 1.5. and also make calculations between the p/e ratio and p/b ratio it’s multiple is not more than 22.5.

we see the 6 criteria for stock selection for the enterprising investor, with this author, gives us some other things that every enterprising investor considers.

how to become a value investor

Other things to consider:

Net-Net result: enterprising investors see the net-net result that means current asset – current liability. making this calculation you get the exact condition of the company.
Special situations: enterprising investors check for the company’s special situations like acquiring the company, novel discovery, etc. (Intelligent Investor: Chapter 15)
Selecting individual stocks is not necessary: If you are very busy with your work so you can hire a broker for your Investment.
Use virtual money to pick stocks: If you are a beginner in the stock market. Benjamin gram recommends you practice for one year with the virtual money to pick stocks. After this, you can use your real money for the investment. (Intelligent Investor: Chapter 15)
Index funds: author give the most advice the buy index funds with minimum charges and invest them each and every month.

after this author gives us the two traits of an enterprising investor, those are as follows:

Disciplined and consistent: Don’t change your approach even if it is unfashionable regarding stock selection.
Pay little attention to what the market is doing: enterprising investor has to focus on what they need to do and how to do it. (Intelligent Investor: Chapter 15)

this is all about the enterprising investor traits and criteria

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Intelligent Investor: Chapter 14

November 25, 2020 by Laxman Sonale 5 Comments

Hello friends, I am Laxman. In today’s article, we see Chapter 14 of the intelligent investor book. In chapter 14, Benjamin gram explains the Defensive investor’s criteria. These criteria help you to pick good return stocks for defensive investors. Chapter 14 of the intelligent investor give some idea for a defensive investor. Those don’t want to give full time for the research analysis. Those criteria as follow.

Previous Chapter 13

7 Criteria for stock Selection:

Adequate Size of Company: Defensive investors have to consider the large size of the company for their money safety. Investing rule no.1 is that Never lose money. If you don’t make money it’s ok but doesn’t lose money. So, for this reason, select the adequate size of the company.
Strong Financial Condition: Sticking with the first rule of investing, you have to select a strong financial condition company. ( Intelligent investor: Chapter 14)
Earning Stability: Defensive investors have to check for the earning stability with continuous five to 10 years, and also check if it goes negative in any year.
Dividend Record: If you are a defensive investor, that means you have to check the dividend record If the company gives the regular dividend and gives slow growth in the dividend.
Earnings Growth: Defensive investor also checks for the earnings growth, which increases 3% in 10 years and 33% in the previous year.
Moderate P/E ratio: Defensive investors also check for the Price earning ratio. This ratio is about less than 15. This ratio, not more than 15. (Intelligent investor: Chapter 14)
Moderate P/B ratio: Defensive investors also check the P/B ratio. This ratio is not more than 1.5.

You have to consider the P/E and P/B multiple is not more than 22. if you consider the above criteria, you will be a good defensive investor. Defensive investors are those that not have enough time to research and not understand the proper accounting. Benjamin gram refer the investors which don’t have time to become enterprising investor, they have to select the longs terms index funds, that have minimum charges. you want to research for the company as a defensive investor you have to consider the above criteria. So benjamin gram gives some due diligence for the defensive investors, they are as follows.

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Due Diligence:- Intelligent investor: Chapter 14

Do your homework: If you want to select stocks on your analysis, you have to read the 5 years annual reports, quarterly reports, and proxy statements. After this, you have more knowledge about the company.
Check out your neighborhood: As a defensive investor, you have to check any investment of institutions investors, that more than the 60%. If the answer is yes then don’t invest in that company. Because when these institutions investors, make a profit they will sell the stocks then stocks price goes down. so for this reason, ownership of institutional investors is not good for individual investors.

This is all about Chapter 14 of intelligent investors.

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Warren Buffett rules of Investing?

October 19, 2020 by Laxman Sonale 2 Comments

Hello friends, In today’s article we see warren Buffett’s rules of investing. Everyone knows this rule but no one follows the warren Buffett rule, because they don’t understand the logic of Warren Buffett’s rules of investing. So friends let’s understand the inner meaning of these rules.

What are Warren Buffett’s rules of Investing?

Investing is the art and we have to learn that art by practicing. For learning this art we have to follow the investing rules, let’s see what is the rules of investing? in one by one format.

Investing Rules:

Rule no. 1: Never lose money :

let’s understand this rule, losing money is like lose of money during an investment or business. This is the simple one meaning, but we also lose money by Investing properly with good company but our money does not grow i.e. also called as the losing money. (Warren Buffett rules of Investing?)

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let’s understand an example: one women’s name is Geeta.

she makes an investment in a Bank, business, and the Stock market. she gets the return after the 10 years of investment from the bank is about 7%, in business 10% and in Stock market 15% percentage from investment.

All of us see that there is a good return from the investment. But there She is the lost money in the bank because the Inflation rate in that 10 years is all about the average is 10%. (Warren Buffett rules of Investing?)

So They lose money in the Bank and the same value of money remains in the business investment. so That concept is called the MONEY ILLUSION. There are lots of people experts know about this stuff. But they don’t tell you about this stuff.