Often known as the father of value investing, Benjamin Graham was also Warren Buffett’s mentor. How big a risk premium required for investing in a company is dependent on how risky the stock is relative to the broad market; which known as correlation beta. In addition companies can operate with different tax levels which can distort the comparative earnings of a company.
Another opportunity for gold investment is golf futures. This is an excellent way to get into the real estate investment market without a large initial investment. However, in many cases the market is being efficient and one investor is right and the other is wrong about the stock.
Greenwald states, “while Buffett in the Berkshire years still speaks with reverence about Graham, he looks for companies that have impregnable franchises even though they sell for multiples of book value.” It’s interesting to see how Buffett has continued to shift and expand the boundaries of what constitutes a value investment.
In my view, Joel Greenblatt does a better job of explaining where to look for interesting investing opportunities in his book You Can Be a Stock Market Genius. If you find the stock price of companies you’ve invested in way above what you’ve valued them, this might be a good time to sell.
What is it: Buying shares that appear under priced by some forms of fundamental analysis, and holding them. Use market fluctuations to your advantage – The market usually is fairly accurate in pricing stocks. After reading this book and applying some of the lessons taught, I can say that I am a better investor in the stock market now.