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Reading the Intelligent Investor, it is striking to see how many stocks there were with a P/E ratio under 15 and with sound financials and that paid good divide

Reading the Intelligent Investor, it is striking to see how many stocks there were with a P/E ratio under 15 and with sound financials and that paid good dividends, I.e. a value stock, in the 1950s, when the book was written. If you try to apply the value investing principles today, you will end up spending an inordinate amount of time looking for a stock like this. The risk of an index fund is less than the amount of dedicated time you would need to spend to practice value investing.

neogodless 5y ago
> the risk... is less than the... time You're comparing two different units here. You might say "the trade off of value investing to reduce risk is a huge investment of time."
JumpCrisscross 5y ago
> is striking to see how many stocks there were with a P/E ratio under 15 P/E of 15 is an earnings yield of 6 2/3 percent. Look at contemporaneous interest rates and that yield makes sense.
throw0101a 5y ago
In his last published interview even Graham himself said you probably shouldn't bother with Graham (and Dodd): >> In selecting the common stock portfolio, do you advise careful study of and selectivity among different issues? > In general, no. I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when our textbook "Graham and Dodd" was first published; but the situation has changed a great deal since then. In the old days any well-trained security analyst could do a good professional job of selecting undervalued issues through detailed studies; but in the light of the enormous amount of research now being carried on, I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost. To that very limited extent I'm on the side of the "efficient market" school of thought now generally accepted by the professors. * http://www.grahamanddoddsville.net/wordpress/Files/Gurus/Benjamin%20Graham/A%20Conversation%20with%20Ben%20Graham%20-%20Financial%20Analysts%20Journal%20-%201976.pdf http://www.grahamanddoddsville.net/wordpress/Files/Gurus/Ben... That was in 1976.
JKCalhoun 5y ago
I agree, but you can Google "dividend aristocrat" stocks to find a list of stocks that are paying dividends above their weight. Just don't expect better than a 5% ROI.
- queuebert 5y ago
  Dividends are taxed punitively, though.
  - Thrymr 5y ago
    Less punitively than earned wages, in the US, for most people.
    - queuebert 5y ago
      No, it's the same. Dividends add into your adjusted gross income.
      - Thrymr 5y ago
        > No, it's the same. Dividends add into your adjusted gross income. Qualified dividends (most dividends for most people from public US companies) are indeed taxed at a lower rate than income. That rate is 0% for up to $41k (single) or $83k (married filing jointly), and for almost everyone it will be lower than the marginal rate on income [0]. It goes into AGI on the tax form, but comes off again with the recalculation. If you have significant dividend income, you are missing out by not doing that calculation! [IANAL and this is not tax advice] [0] https://www.nerdwallet.com/article/taxes/dividend-tax-rate https://www.nerdwallet.com/article/taxes/dividend-tax-rate
queuebert 5y ago
Interest rates were much higher back then, so equities were not as competitive an investment, given their risk level.

neogodless 5y ago

> the risk... is less than the... time You're comparing two different units here. You might say "the trade off of value investing to reduce risk is a huge investment of time."

JumpCrisscross 5y ago

> is striking to see how many stocks there were with a P/E ratio under 15 P/E of 15 is an earnings yield of 6 2/3 percent. Look at contemporaneous interest rates and that yield makes sense.

throw0101a 5y ago

In his last published interview even Graham himself said you probably shouldn't bother with Graham (and Dodd): >> In selecting the common stock portfolio, do you advise careful study of and selectivity among different issues? > In general, no. I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when our textbook "Graham and Dodd" was first published; but the situation has changed a great deal since then. In the old days any well-trained security analyst could do a good professional job of selecting undervalued issues through detailed studies; but in the light of the enormous amount of research now being carried on, I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost. To that very limited extent I'm on the side of the "efficient market" school of thought now generally accepted by the professors. * http://www.grahamanddoddsville.net/wordpress/Files/Gurus/Benjamin%20Graham/A%20Conversation%20with%20Ben%20Graham%20-%20Financial%20Analysts%20Journal%20-%201976.pdf http://www.grahamanddoddsville.net/wordpress/Files/Gurus/Ben... That was in 1976.

JKCalhoun 5y ago

I agree, but you can Google "dividend aristocrat" stocks to find a list of stocks that are paying dividends above their weight. Just don't expect better than a 5% ROI.

queuebert 5y ago
Dividends are taxed punitively, though.
- Thrymr 5y ago
  Less punitively than earned wages, in the US, for most people.
  - queuebert 5y ago
    No, it's the same. Dividends add into your adjusted gross income.
    - Thrymr 5y ago
      > No, it's the same. Dividends add into your adjusted gross income. Qualified dividends (most dividends for most people from public US companies) are indeed taxed at a lower rate than income. That rate is 0% for up to $41k (single) or $83k (married filing jointly), and for almost everyone it will be lower than the marginal rate on income [0]. It goes into AGI on the tax form, but comes off again with the recalculation. If you have significant dividend income, you are missing out by not doing that calculation! [IANAL and this is not tax advice] [0] https://www.nerdwallet.com/article/taxes/dividend-tax-rate https://www.nerdwallet.com/article/taxes/dividend-tax-rate

queuebert 5y ago

Interest rates were much higher back then, so equities were not as competitive an investment, given their risk level.