| The central theme about the value investing | | | | tangible book value. The rule is that the current ratio, |
| strategy, so well documented in the Benjamin | | | | i.e. the current assets divided by the current liabilities |
| Graham classic bestseller, "The Intelligent Investor" is | | | | must be more than two. |
| about searching and identifying undervalued stocks to | | | | 4. The investor should check and ensure that the |
| buy from the stock market. Although this book was | | | | historical earnings to price yield is higher than the |
| written well over half a century ago, it still remains | | | | bond yield. The company must also have a history of |
| one of the most important investment books ever | | | | stable earnings. |
| written for investors who believed in the fundamental | | | | 5. The company's earnings must show a rising trend |
| analysis technique for stock selection, in particular, for | | | | and the earnings must have doubled over the last |
| undervalued stocks. | | | | ten years. |
| In his book, the great guru, Benjamin Graham argued | | | | 6. One other criteria is to ensure that the company's |
| that the value investing strategy to identify the | | | | dividend yield is at least two third of the bond yield. |
| undervalued stocks to buy can be carried out based | | | | Historical records have shown that many fund |
| on a just a few simple principles and criteria. Some of | | | | managers have benefited from the value investing |
| his criteria for stock picks for undervalued stocks are | | | | strategy outlined by Benjamin Graham, and so many |
| interpreted and simplified below:- | | | | glowing tributes from successful well known |
| 1. Firstly, the investor should ensure that the stock | | | | investors, including the greatest investor of all times, |
| price is below two third of the tangible book value of | | | | Mr. Warren Buffet have been given to this investing |
| the stock. The tangible book value is the value of the | | | | strategy. |
| total assets of the company less the total liabilities of | | | | Therefore, it is without doubt we should be |
| the company. | | | | educating ourselves on the above mentioned |
| 2. The investor should also ensure that the stock | | | | principles to acquire that important ability to search |
| price is below two third of the net current assets of | | | | and identify the undervalued stocks to buy. Needless |
| the company. The net current assets are the assets | | | | to say, by applying this proven investment strategy, |
| of the company that can be immediately converted | | | | the probability of success in profiting from the stock |
| into cash less the total debt of the company. | | | | market is certainly enhanced. |
| 3. Thirdly, ensure that the total debt is less than the | | | | |