Volume 1, Number 3, Third Quarter 2003
Price collapses in dotcoms and telecoms have fostered a comeback in the fundamental analysis identified with Benjamin Graham (1894–1976). Defining Graham’s method is no simple task, however; his thinking evolved considerably over a 60 year career. Reducing Graham’s approach to a quantitative formula does not produce superior performance. His most celebrated pupil,Warren Buffett, freely acknowledges buying entirely different stocks than Graham would. Graham’s notion of paying less than breakup value remains a useful pricing concept. Investors must do hard analytical work, however, to separate the nuggets from the worthless overburden.