Tweet épinglé
Benjamin Graham, the "father of value investing" and mentor to Warren Buffett, established principles that are largely timeless, but the mechanics of how he applied them have struggled to keep up with the modern, intangible-heavy economy.
Here is a summary of Benjamin Graham’s teachings in the context of the present economy categorized by what remains Relevant and what is largely Irrelevant (or requires significant adaptation).
Relevant (The Timeless Philosophy)
1.The "Margin of Safety":
Concept: Buying an asset for significantly less than its calculated intrinsic value to protect against errors or bad luck.
Relevance: High. In an era of high geopolitical instability and fears of recession, demanding a buffer between price and value is the only true hedge against permanent capital loss. It is the antidote to "FOMO" (Fear Of Missing Out).
2."Mr. Market":
Concept: The market is a manic-depressive business partner who offers to buy or sell shares at different prices every day. You should use his mood swings to your advantage, not be influenced by them.
Relevance: Critical. With 24/7 news cycles, crypto volatility, and algorithmic trading, market mood swings are more violent than in Graham’s time. Viewing volatility as an opportunity rather than a threat is essential for mental sanity.
3.Investment vs. Speculation: Concept: An investment promises safety of principal and an adequate return based on analysis. Everything else is speculation.
Relevance: High. The rise of "meme stocks," NFTs, and zero-day options trading has blurred this line. Graham’s rigid definition helps investors identify when they are gambling versus when they are actually investing.
4.Dollar Cost Averaging (Formula Investing):
Concept: Investing a fixed amount of money at regular intervals, regardless of market level.
Relevance: High. This remains the best strategy for the majority of retail investors to navigate market highs and lows without falling victim to emotions.
Irrelevant/outdated (The Specific Mechanics)
1."Cigar Butt" / Net-Net Investing:
Concept: Buying companies trading below their Net Current Asset Value (liquidation value). Essentially, buying a dollar for 50 cents.
Status: Irrelevant/Impossible.
Why: Information travels too fast today. Screeners and algorithms find these mispricings instantly, correcting them before a human can. Furthermore, companies trading this cheaply today are usually "value traps" facing bankruptcy or fraud, unlike the decent companies Graham found in the 1930s.
2.Strict P/B (Price-to-Book) Ratios:
Concept: Graham avoided buying stocks trading significantly above their "Book Value" (accounting value of assets).
Status: Irrelevant.
Why: Modern tech giants (Microsoft, Google,) have low "book value" because their primary assets are code and user networks, which accounting rules do not value accurately on the balance sheet. Following Graham's strict P/B rules would have forced you to miss the biggest wealth creators of the last 40 years.
3.The Rigid 25/75 Stock/Bond Rule:
Concept: An investor should never have less than 25% or more than 75% in equities, with the rest in high-grade bonds.
Status: Needs Adaptation.
Why: For a long period after 2008, bonds offered negative or near-zero real returns (after inflation). While rates have risen recently, blindly holding 50% in bonds during a high-inflation environment can guarantee a loss of purchasing power, something Graham warned against but didn't face in the same "financial repression" context we see today.
4.Ignoring "Growth" as a Component of Value:
Concept: Graham was skeptical of projecting future growth, preferring to pay for what a company earns now.
Status: Irrelevant.
Why: In digital economy, companies can scale globally with near-zero marginal cost (e.g., software). "Value" today must include a reasonable estimation of growth.
W.Buffett "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
English
