Benjamin Graham Portfolio - The Intelligent Investor

Last Updated: 9/7/2024

Benjamin Graham Portfolio Strategy Explanation Video

The late Benjamin Graham may be the oldest of the gurus we follow, but his impact on the investing world has lasted for decades after his death in 1976. Known as both the "Father of Value Investing" and the founder of the entire field of security analysis, Graham mentored several of history's greatest investors -- including Warren Buffett -- and inspired a slew of others, including John Templeton, Mario Gabelli, and another of Validea's gurus, John Neff. Graham built his fortune and reputation after living through some extremely difficult times, including both the Great Depression and his own family's financial woes following his father's death when Benjamin was a young man. His investment firm posted per annum returns of about 20 percent from 1936 to 1956, far outpacing the 12.2 percent average return for the market during that time.
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Since 2003, this portfolio has returned 808.5%, outperforming the market by 364.5% using its optimal annual rebalancing period and 10 stock portfolio size.

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* Returns are model returns and do not reflect actual trading. Full performance disclaimer

Benjamin Graham Portfolio - Value Investor

Validea used the investment strategy outlined in the book The Intelligent Investor written by Benjamin Graham to create our Value Investor portfolio.

Not surprisingly, given that he lived through his family's financial troubles and the Great Depression, Graham used a conservative, risk-averse approach that focused as much on preserving capital as it did on producing big gains. Trendy, hot stocks didn't garner his attention; he was concerned with companies' balance sheets and their fundamentals. How much debt did they carry? How did their stock price compare to the amount of per-share earnings they were generating? Did the firm have strong sales figures? This value-centric, company-focused approach may be used by a lot of investors today, but it was Graham who first popularized it. A key concept behind his approach was the "margin of safety" -- the difference between a stock's price and the value of its underlying business. Graham focused on stocks with high margins of safety (meaning their stocks were selling on the cheap compared to what he believed to be the intrinsic value of their businesses), because their already low prices offered significant downside protection.

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Benjamin Graham Portfolio Strategy Explainer

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Performance Disclaimer: Returns presented on Validea.com are model returns and do not represent actual trading. As a result, they do not incorporate any commissions or other trading costs or fees. Model portfolios with inception dates on or after 12/30/2005 include a combination of back tested and live model returns. The back-tested performance results shown are hypothetical and are not the result of real-time management of actual accounts. The back-testing of performance differs from actual account performance because the investment strategy may be adjusted at any time, for any reason and can continue to be changed until desired or better performance results are achieved. Back-tested returns are presented to provide general information regarding how the underlying strategy behind the portfolio performed in our historical testing. A back-tested strategy has the benefit of hindsight and the results do not reflect the impact that material economic or market factors may have had on advisor's decision-making if actual client assets were being managed using this approach. The model portfolios offered on Validea are concentrated and as a result they will exhibit high levels of volatility and their performance can be substantially impacted by the performance of individual positions.

Optimal portfolios presented on Validea.com represent the rebalancing period that has led to the best historical performance for each of our equity models. Each optimal portfolio was determined after the fact with performance information that was not available at portfolio inception. As a result, an investor could not have invested in the optimal portfolio since its inception. Optimal portfolios are presented to allow investors to quickly determine the portfolio size and rebalancing period that has performed best for each of our models in our historical testing.

Both the model portfolio and benchmark returns presented for all equity portfolios on Validea.com are not inclusive of dividends. Returns for our ETF portfolios and trend following system, and the benchmarks they are compared to, are inclusive of dividends. The S&P 500 is presented as a benchmark because it is the most widely followed benchmark of the overall US market and is most often used by investors for return comparison purposes. As with any investment strategy, there is potential for profit as well as the possibility of loss and investors may incur a loss despite a past history of gains. Past performance does not guarantee future results. Results will vary with economic and market conditions.

Validea.com is a research provider that is owned and operated by The Reese Group, LLC. Validea.com offers model portfolios, screening and stock analysis that is not customized to any individual. No information on Validea.com should be construed as investment advice. Validea Capital Management is a separate investment advisory firm registered with the state of Connecticut. Validea Capital offers investment management services directly to clients and is a separate entity from The Reese Group, LLC. The Reese Group and Validea Capital are affiliated entities and share partial common ownership.