Graham technique:
A discussion of the security analysis techniques used by the investment "guru" Benjamin Graham. Discuss the technique that Graham suggests and provide the link to your favorite source on value investing to your classmates.No presentation of fundamental security analysis would be complete without a discussion of the ideas of Benjamin Graham, the greatest of the investment "cures" Until the evolution of modern portfolio theory in the latter half of the 20th century, Graham was the single most important thinker. writer, and teacher in the field of investment analysis, His influence on investment professionals remains very strong.
Graham's magnum opus is Security Analysis, written with Columbia Professor David Dodd in 1934. Graham believed careful analysis of a firm's financial statements could turn up bargain stocks. Over the years, he developed many different piles for determining the most important financial ratios and the critical values for judging a stock to be undervalued. Through many editions, his book has been so influential and successful that widespread adoption of Graham's techniques has led to the elimination of the very bargains they are designed identify.
In a 1976 seminar Graham said
I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say forty year; ago. when our textbook 'Graham and Dodd". first published: but the situation has changed good deal since thee in the old days any well- trained security analyst could do a great job at selecting undervalued issues through detailed studies: but in the light the caorrivec ainatIFIT of research now tieing carried on, I doubt whether r. ail ip extensive efforts will generate suffieiently superi0 SA:CIUMIC,ter very limited extent the s;de of the -efficient rnarka"abneocct by the professors.
I am no longer an advocate of elaborate techniques of security an la order to and superior value opportunities. This was a rewarding activity, say, lorry years age}, when kW textbook 'Graham and Dodd" was first published; but the situation has changed. a good deal since then. In the old days any well-trained security analyst could do a good professional job of selecting undereelned issues through &tailed studies: but in the light of the enormous amount of research now being carried on. I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to illfstify their cost lb that very 'limited ex-tent I'm on the side of the "efficient market" school of thought now generally- aoccpted by the professors.