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Strategies & Market Trends : Value Investing
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To: NikhilJog who wrote (46382)1/31/2012 3:42:40 PM
From: E_K_S  Read Replies (2) of 78535
 
Hi NikhilJog -

Everything I look at now (both past buys and sells) I am looking through the Graham Number screen. It's not the only thing I look at but seems like a good first view since it's easy and simple to calculate (use the ADFN Website for tangible BV statistics Paul Senior posted up thread).

Do a Google Search on "Graham Number" and look at Wikidpedia for how to calculate and the reasons for using it as a value metric. Some value investors do not like to use it as it has its limitations when looking at certain types of industries and/or sectors.

Since you are a knowledgeable MBA graduate go review the valuation formula and report back to the thread your opinion on it's usefulness.

I am finding that for my longer term holds 18-36 months, If I can buy a stock at a discount to it's GN, I will eventually get a chance to sell it as some premium to that value. Check out HES. This is one Paul Senior posted recently.

This stock is selling between 35%-45% below it's GN (depending on the BV you calculate- tangible and the earnings number you use current or analysts's estimates).

I am very conservative in all of my new buys right now as this market is in a tenuous position w/ the European/Greek default pending (1st default date 2/14/2012), historically low Fed Funds rate (to stay at this rate for at least 24 months) and still in a little to no growth (one can argue deflationary) environment. Not really the best time to be buying stocks IMO unless you can get them at a significant bargain.

EKS
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