Ben Graham totally discredits value investing at the end of his career?
I'm a pretty serious student of Ben Graham, and just saw this the other day. Pretty disappointed.
"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, 40 years ago, when our textbook "Graham and Dodd" was first published; but the situation has changed a great deal since then. In the old days any well-trained security analyst could do a good professional job of selecting undervalued issues through detailed 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 justify their cost. To that very limited extent, I'm on the side of the "efficient market" school of thought now generally accepted by the professors."
So does he totally discredit value investing? I haven't read this in its entire context, so it may not be over. I would love to find out what he actually meant, and how someone like Buffett would respond.






Warren Buffet initially came
Warren Buffet initially came to be who he came to be by investing in growth companies.... especially insurance companies. Not sure if he would admit it though.
mb666: Warren Buffet
Warren Buffet initially came to be who he came to be by investing in growth companies.... especially insurance companies. Not sure if he would admit it though.
he's pretty clear in his letters that a lot of the money he invested with was the float from the insurance companies
Who are you going to believe, me or your lying eyes?
Ben Graham has always wavered
Ben Graham has always wavered back and forth on the idea that one really could get superior results. In The Intelligent Investor, he outlines something very much like the Efficient Market Hypothesis, pointing out the difficulty for the average investor of discovering a market inefficiency that all of the research analysts and money managers on Wall Street have missed.
I have read in several other places that late in life he moved further away from the belief that value investing could provide superior returns. Your quotation from Graham does not seem like a big break with his past views, but instead a moderate change in belief brought about by new circumstances.
So the father of value
So the father of value investing now believes that value investing doesn't work? That's pretty disappointing to hear. Why isn't this topic blown up more? Everyone talks about how great value investing is, but no one mentions how Graham thinks it is not relevant anymore. I'm assuming it's alive today because of Buffett.
can you share where this
can you share where this quote was from? nice find
I first saw it from an
I first saw it from an article on seeking alpha. I'm a adamant value investor, and this is just disheartening to see.
I hate EMH and dislike the
I hate EMH and dislike the idea that Ben Graham would discredit the best idea in finance - especially since he came up with the fuckin' thing. Wow, I really hope everyone starts abiding by the EMH principles so I can make some money - it's easy to win a race if no one else even tries.
Some quotes from Warren Buffet that Mr. Graham should read:
- "Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing."
-"If a business does well, the stock eventually follows."
- "Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it."
- "Price is what you pay. Value is what you get."
- "Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised."
"One man with courage makes a majority." — Andrew Jackson
BP fell as low as $30 a share
BP fell as low as $30 a share after the Oil Spill. Its decline in price was 100% based on market emotion, with no financial analysis justifying the fall in share price. Needless to say, any value investor could have picked up on this. Made a 33% return in about a month.
SlikRick: BP fell as low as
BP fell as low as $30 a share after the Oil Spill. Its decline in price was 100% based on market emotion, with no financial analysis justifying the fall in share price. Needless to say, any value investor could have picked up on this. Made a 33% return in about a month.
This. Some of the share prices hit by the financial crisis didn't deserve to be, and there's definitely money to be made in the long-run if you spot them.
Damn you Rodger!
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It would be nice to have a
It would be nice to have a link to the original quote.
And yes value investing is very tough in developed economies, but the pie lies in the developing (third world) economies.
eriginal: I hate EMH and
I hate EMH and dislike the idea that Ben Graham would discredit the best idea in finance - especially since he came up with the fuckin' thing. Wow, I really hope everyone starts abiding by the EMH principles so I can make some money - it's easy to win a race if no one else even tries.
Some quotes from Warren Buffet that Mr. Graham should read:
- "Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing."
-"If a business does well, the stock eventually follows."
- "Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it."
- "Price is what you pay. Value is what you get."
- "Great investment opportunities come around when excellent companies are surrounded by unusual circumstances that cause the stock to be misappraised."
It would actually be almost impossible to win such a race. You can identify the best company in the world, but if no one else knows/cares how good it is, the price is going to say "mehhhh"
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SynergyWeek: SlikRick: BP
BP fell as low as $30 a share after the Oil Spill. Its decline in price was 100% based on market emotion, with no financial analysis justifying the fall in share price. Needless to say, any value investor could have picked up on this. Made a 33% return in about a month.
This. Some of the share prices hit by the financial crisis didn't deserve to be, and there's definitely money to be made in the long-run if you spot them.
I wouldn't say it was purely on emotion, there were real concerns that BP could face huge fines and regulatory uncertainty for a long time following the oil spill. No one really knew how long it was going to last and no one really knew what the political reaction would be. Its really easy to look back and think the guys who sold BP were idiots, but history is full of firsts, and there was a possibility it could severely damaged the firm's long term profitability.
Why should Graham's view
Why should Graham's view influence yours? If you find yourself profitable following his/your principles, then keep doing it.
The investing/trading game is all about getting in earlier than someone else. What a value investor does is buy when no one has the balls to do it, and sell when everyone believes the stock is God's gift to humanity. That is the key to his superior returns. He makes the decisions the market cannot, before the market decides it's the right thing to do.
In any case, all Graham is really saying is that there is no mechanical solution to the market puzzle. Understand the game, and you'll do fine.
There is no value to be found
There is no value to be found today, it's all HFT bots trading amongst themselves in a sea of liquidity from the Fed. We don't have markets anymore, we have theatre.
JeffSkilling: There is no
There is no value to be found today, it's all HFT bots trading amongst themselves in a sea of liquidity from the Fed. We don't have markets anymore, we have theatre.
What does this mean for value and LT investors and students wanting to become one of them? If there's no market anymore, than it would follow that there will be a reduction in jobs. Is this, too, a dying industry?
I can hardly imagine, I think there will always be markets to invest in and I don't believe that HFT will increase long term due to future regulations.
If the market misprices
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I think Graham was talking
Interesting... i have read
"Well, you know, I was a human being before I became a businessman." -- George Soros
Buffett always talks about
Simplicity is the highest form of sophistication ~ Leonardo da Vinci
Didn't Graham lose a fortune
Graham provided the
Have you guys read Security
bananadine: Have you guys
"Well, you know, I was a human being before I became a businessman." -- George Soros
http://greenbackd.com/2012/04
All of you talking about
ggsonny: All of you talking
So "it's hard"=totally
There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
arant: Buffett always talks
There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
There have been a lot of
Gray Fox: There have been a
There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
SlikRick: BP fell as low as
I think profitability in the
lekman: SynergyWeek: Slik
"History doesn't repeat itself, but it does rhyme."
cyoungmark: I think
I meant prediction as in,
cyoungmark: I meant
Prediction as in.. you must
cyoungmark: Prediction as
Your right. I'm discounting
I do believe that there is
Markets oscillate back and
^ It depends on your time
so much talk about value,
Wrong - Graham merely pointed
sofa king smooth: So no, he
I came across this article
Terriers12: So does he
it could be relative as in