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Chapter 14: Stock Selection for the Defensive Investor Defensive investors have two possible strategies for stock selection: Buy the Market – Acquire a cross-section sample of the leading issues. This will include both high-priced popular and low-priced unpopular companies. This can be done easily today by buying a low-cost index fund, like those offered by Vanguard. Zweig describes index funds as “the best tool ever created for low-maintenance stock . . .
Chapter 13 – A Comparison of Four Listed Companies Graham uses this chapter to illustrate security analysis. A lot of data is given, which I will not reproduce in full. Rather than reproduce the bulk of the chapter here, I will try to show, at a high level, what Graham does. He looks at four companies First, he starts by looking at their P/E in the most recent year vs. their . . .
Chapter 12 – Things to Consider about Per-Share Earnings Two key points on EPS: 1. Don’t attribute a lot of weight to a single year’s EPS 2. If you must use short-term earnings, look for things that are artificially inflating EPS. With regard to #2, this is an important aspect of reviewing a company’s financials. Basic EPS is one thing, but it is crucially important to look at the . . .
Chapter 11 – Security Analysis for the Lay Investor Security analysis involves analyzing the business, its operating results and financial position, its strengths and weaknesses, opportunities and threats, future estimates with certain assumptions, comparisons with similar companies or the same company historically, and a judgment of the security’s attractiveness. Graham immediately cautions against focusing on the future estimates of growth and sales, as these are the least reliable figures we have . . .
In 1987, Francis identified 32 different individuals or families that . . . |
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