Benjamin Graham Stocks - The Origin and Basic Concept of Investment
Who was Benjamin Graham?
Benjamin Graham (1494 - 1976) is the founder of modern investment theory. He introduced the concept of value investing, which is still very important for investors today.
His brief biography is detailed
Graham was born in a London family, but he moved to the United States at a very young age. He received his later education at Columbia University and later started teaching.
The impact of Graham's principles on the stock market
Graham's principles are not only important for investors, but have played an important role in controlling the movement of the overall stock market today. One of his students is Mr. Buffett, who is a well-known name in the world's stock market.
What is meant by value investing?
Value investing refers to stocks that can be bought at a price lower than their intrinsic value. Graham advises investors to hold valuable stocks for a long time without getting distracted by the ups and downs of the stock market.
Graham's investment philosophy
According to him, it is very important to analyze the actual value of the company while investing. For this, he adopts the safety margin strategy.
What is meant by safety margin?
The safety margin refers to the difference between the actual value of the stock and the market price. If the company's share price is $100 and the investor buys that share for $70, then $30 is the safety margin.
Benjamin's famous book
Intelligent Investor
This is a very influential book in the world of investment. In this book, Graham has given an illustrated explanation of safe and effective investment methods.
Safety Assessment
In this book, he explains investment strategies through technical and fundamental analysis.
Graham Number and its Originality
Method of Calculating Graham Number
Graham Number is a method that helps in determining the correct price of buying shares.
Formula:
√22.5×EPS×BVPS
Where,
EPS = Earnings per share
BVPS = Book value per share
Selecting stocks using Graham Number
If the market price of a company is less than the Graham Number, then it may be suitable for investment.
Supporters of Benjamin Gram
Warren Buffett's investment process
Warren Buffett has become one of the richest people in the world today because of following his teacher's value investment philosophy.
Other famous investors
Among other successful investors who have succeeded by following the vision of Mr. Graham are Charlie Munger, Seth Clerman, etc.
Conclusion
Benjamin Graham Stocks' principles hold a very important place in the stock market. If you follow his principles in investing in the stock market, you can control a lot of risk and achieve success in long-term planning.
FAQs
1.Q: Benjamin Graham Stocks Selection Process ?Answer: Mr. Graham used to select stocks whose fair value is lower than the market price.
Answer: Yes, Graham's principles are still followed by many successful investors.
Answer: New investors can learn the correct method of stock market analysis and the basic principles of risk management.
Answer: Yes, it helps investors make decisions to buy stocks at a price lower than the actual price of the stock in the market.
5.Q:How does Warren Buffett follow Graham's thinking?
Answer: He analyzes the intrinsic value of companies and invests for the long term, which is part of Graham's core philosophy.