Benjamin Graham

Timeless Sage Advice

 Over a ten-year period the typical excess of stock earnings power over bond interest may aggregate 4/3 of the price paid. 

This figure is sufficient to provide a very real margin of safety--which, under favorable conditions, will prevent or minimize a loss...If the purchases are made at the average level of the market over a span of years, the prices paid should carry with them assurance of an adequate margin of safety.  

The danger to investors lies in concentrating their purchases in the upper levels of the market.....

Common Sense Investing:
The Papers of Benjamin Graham
Benjamin Graham

Stock Market Rockets Ahead!

When will the Bear Roar?

DYI: The S&P 500 is danger close to crash alert territory the NASDAQ is and has been for many months on top of the mountain, both markets will underperform stogy old high quality long term corporate bonds.  Not just an opinion.  Not reading tarot cards or tea leaves; it is SIMPLE ARITHMETIC!  Bonds yields are significantly higher than earnings yield for stocks. 

Competition between earnings power (yield) for stocks and current yields for long term bonds continues with stocks and bonds further widening the gap.  Shiller PE for the S&P 500 38.54 and the NDAQ (NASDAQ) Shiller PE Ratio: 47.10 (As of Feb. 04, 2025)!  Long term investment grade bonds current yield 5.41%.

DYI’s Ben Graham Corner let’s do the simple arithmetic and see how far along these two markets for RISK!

S&P 500 here we go…1 ÷ 38.54 x 100 x 1.1 ÷ 5.41 = 0.53 (rounded). 

NASDAQ:  1 ÷ 47.10 x 100 x 1.1 ÷ 5.41 = 0.43 (rounded)

2.00+ Stocks on the give-away-table!

1.75+ Safe for large lump sums & DCA

1.30+ Safe for DCA

1.29 Or less: Mid-Point - Hold stocks and purchase bonds.

1.00 Or less: Sell stocks - Purchase Bonds S&P 500

0.50 Or less:  Stock Market Crash Alert! NASDAQ

Purchase 30 year Treasury Bonds!