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Strategies & Market Trends : Waiting for the big Kahuna

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To: Oeconomicus who wrote (16589)4/16/1998 12:19:00 AM
From: Chip McVickar  Read Replies (1) of 94695
 
Thanks Bob

Excellant post....

Ben Graham developed 14 basic points of investing...which he offered
in his speaking and writing.

#4 Was a Buy formula....to find a stock that was underpriced.

The intrinsic value of a stock equals: E(2R+8.5)x4.4/Y

E = earnings
R = growth rate
Y = current yield on AAA rated corporate bonds
8.5 = appropriate price-to-earnings multiple for a company with static growth
4.4% = was the average bond yield or the Y factor

Note: 6.51% is the corporate bond yield today(15th)- Merrill Lynch index

Wonder how many stocks can be found to fit that scale today.
Chip
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