Defensive deep-value investing
Benjamin Graham's Investing Strategy
Benjamin Graham (Buffett's mentor and the father of value investing) codified the 'Defensive Investor' framework in The Intelligent Investor. The bar is low, but each criterion is non-negotiable.
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The framework, in plain English
- P/E ratio ≤ 15 (relative to current earnings).
- P/B ratio ≤ 1.5 (book value protection).
- Current ratio ≥ 2 (short-term obligations covered).
- Debt / Equity ≤ 1 (conservative balance sheet).
- Profitable in each of the last 5 years (no recent losses).
- Some earnings growth: even modest revenue/EPS growth qualifies.
From The Intelligent Investor (Graham, 1949) and Security Analysis.
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