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Strategies & Market Trends : Value Investing

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To: cfimx who wrote (5501)	12/20/1998 1:33:00 PM
From: Freedom Fighter	Read Replies (1) of 78667

A Quick thought on Graham's Techniques I think the biggest problem with (let's call them) Graham's rules for finding value is that it is harder to find investments that fit his criteria in today's environment. There have also been some fundamental business and economic changes since then. I think the principals are still 100% correct though. Here is just one example: In Graham's time, a company bought below its book value (assuming it accurately reflected the value of the net worth) or a net/net could work out fine if the company was liquidated. Now that is not the case to the same degree. The business/worker social contract has changed since Graham's time. When you start breaking up a company now, there are all sorts of employee packages, golden parachutes, and other benefits to be paid to workers. So a net/net or liquidation has to be selling at an extraordinary discount to really be an outstanding value. Sometimes hundreds of millions or even billions of dollars go out the door to employees at restructuring time. Wayne Crimi members.aol.com

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