Quickly construct a portfolio using the 17-rule framework of Benjamin Graham, Warren Buffett's mentor.
Definitions
Graham recommended three grades of stocks — Defensive, Enterprising, and NCAV (or Net-Net) — in The Intelligent Investor, and 17 rules to identify them.
Screeners
GrahamValue has two Graham screeners — Classic and Advanced.
The Classic Graham Screener is free and does not limit ungraded Graham Numbers and NCAVs, but limits Intrinsic Values to 70%. The Advanced Graham Screener though, has no such restriction.
At today's bond yields, completely Defensive and Enterprising grade Graham stocks require Intrinsic Values of 70% or higher.
Grades
a. Defensive
The following links will open the screeners preloaded with stocks that clear Graham's eight rules for Defensive Industrials.
The following link will open the Advanced Graham Screener preloaded with stocks that clear Graham's seven rules for Defensive Utilities and Financials. These rules are an advanced customization of the core Defensive rules, and so not supported by the free Classic Graham Screener.
Any ten (or more) stocks from these two lists combined will allow us to construct a complete Defensive Graham portfolio.
b. Enterprising
The following links will open the screeners preloaded with stocks that clear Graham's seven rules for Enterprising investment.
Any twenty (or more) stocks from this list will allow us to construct a complete Enterprising Graham portfolio.
c. NCAV
The following links will open the screeners preloaded with stocks that clear Graham's two rules for NCAV (or Net-Net) investment.
Any thirty (or more) stocks from this list will allow us to construct a complete NCAV Graham portfolio.
Diversification
Graham's framework is designed for building a complete portfolio, and not for picking individual stocks. Graham therefore gave very specific instructions on position sizing as well.
Warren Buffett wrote the following about Graham's investment framework in 2008.
"My intellectual odyssey ended, however, when I met Ben and Dave, first through their writings and then in person. They laid out a roadmap for investing that I have now been following for 57 years. There’s been no reason to look for another."
Buffett about Graham
Son named after Graham
"Absolutely" valid in 2018
In the 2018 Balance of Power interview for Bloomberg Markets, Warren Buffett says yet again:
"The principles [of investing] haven't changed at all... It's exactly what Ben Graham wrote in 1949."
Submitted by GrahamValue. Created on Tuesday 23rd May 2017. Updated on Monday 31st January 2022.