Too many serious inventors, Benjamin Graham is the be-all-end-all of investing gurus. Graham was one of the earliest supporters of value investing and his book “The Intelligent Investor” is still one of the most sought-after investing books today--even 71 years after publication. Was he the world’s greatest investor though? That is an argument for another time but first, let’s see why he at least earns a spot in the conversation.
To this day “value investing” is one of the top investing strategies available and Benjamin Graham was a huge supporter of it. The idea of value investing is all about buying something at a cheaper price than it’s worth. Some may think that’s a bad idea since if a stock is cheaper than it’s worth, then surely it must mean it’s failing right? Not exactly.
Some factors can affect the price of an asset to the point where it is undervalued. Usually, investor psychology is the main reason for this. Due to some bad news that many investors may follow too closely, assets can be depreciated and remain undervalued for a long period of time. This moment is exactly the perfect moment to strike according to Benjamin Graham.
Value investing is essentially what everyone calls “buying the dip” nowadays. Some of the world’s great investors like Benjamin Graham and Warren Buffet always keep an eye out for assets that are being held below value for silly reasons like rumors or bad news. As Warren Buffet once famously said, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
When market sentiment is showing high “fear levels” this signifies the best time possible for value investors to enter the market. Think about that next time you seared on the market and consider selling.
Besides looking for when a stock is undervalued, Benjamin Graham had a few other key points to look out for when investing invaluable assets. For example, look for:
Asset quality rating: look for assets with an asset quality rating of average or better
Positive earns per share growth: find companies with positive earnings per share growth over the last several years with no earnings deficits.
Dividends: invest in companies that pay dividends
Oftentimes, the best decisions for the future come from analyzing the greats of the past. Benjamin Graham was a value stock pioneer. Whether you’re a crypto investor, precious metals, stocks, bonds, etc. there’s wisdom to be had in value investing.