Assessing the Graham’s Formula for Stock Selection: Too Good to Be True? ()
Abstract
Benjamin Graham offered a straightforward
and simple formula to evaluate stocks’ intrinsic value. Many regard the Graham Formula
is a very simplistic way of measuring an individual company’s intrinsic value. Graham
and Warren Buffet however felt that the simplicity of the model allowed them to
quickly and accurately identify undervalued companies, and stay away from overvalued
ones. In this paper, we wanted to explore the effectiveness of the Graham’s formula.
We wanted to see if using the Graham’s formula, investors can achieve excess returns
above the market over a period of 17 years.
Share and Cite:
Lin, J. and Sung, J. (2014) Assessing the Graham’s Formula for Stock Selection: Too Good to Be True?.
Open Journal of Social Sciences,
2, 1-5. doi:
10.4236/jss.2014.23001.
Conflicts of Interest
The authors declare no conflicts of interest.
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