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Understanding The Benjamin Graham Formula Correctly

V = EPS x (8.5 + 2g) is used only due to recent omissions in The Intelligent Investor, the Value Investing textbook by Warren Buffett's mentor — https://www.grahamvalue.com/article/u... Transcript: Benjamin Graham was a professor and financial analyst who mentored famous Value Investors such as Warren Buffett. Buffett describes Graham's book, The Intelligent Investor, as "by far the best book about investing ever written". Graham dedicated two entire chapters of The Intelligent Investor to his stock selection framework. But the formula most attributed to Graham today is: Value = Current (Normal) Earnings x (8.5 plus twice the expected annual growth rate) Graham only mentions this formula briefly in an unrelated chapter, to demonstrate why growth expectations are rarely justified; and gave two warnings with it. The first is a footnote that says that this formula does not give an intrinsic value. The second, a clearly-labeled warning, says that such growth rate projections are never reliable. But the most common edition of The Intelligent Investor today, is the one with commentary by Jason Zweig; in which all original footnotes have been moved to the end of the book. Graham's cautionary footnote is now no longer with the formula, but on Page 585 where no one is likely to see it. This modification is possibly what has led to misunderstandings about this formula. The full warning is given a couple of pages later, and is easy to miss. Graham's actual framework consists of three categories of stocks — Defensive, Enterprising and Net-Net — and seventeen rules for identifying them. The statistical work of finding such stocks is easily automated using modern data mining software. #theintelligentinvestor #valueinvesting #benjamingraham