Graham's Long-Term Winning Approach for Enterprising & Defensive Investors

    by Cara Scatizzi

    Value investing has proven itself over time to be a highly successful investment approach. And while success has many fathers, Benjamin Graham is certainly one of them. In this case, father really does know best.

    Graham’s approach focuses on determining the “intrinsic” value of a stock, which takes into consideration the firm’s earnings, tangible assets, dividends, financial strength and stability. He believes investors should buy stocks whose prices are close to their intrinsic value, and preferably those that are priced lower than their intrinsic value.

    AAII developed several screens based on Graham’s investing philosophy. Two of the screens, Graham Defensive Investor (Non-Utility) and Graham Enterprising Investor, were the top-performing value strategies in 2005, and both have respectable long-term records.

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