Posted by chongkeatL1 > 2014-08-10 17:26 | Report Abuse

Hi Intelligent Investor, I'm curious about the Graham Number. If I'm not mistaken, it means that a high P/E is acceptable as long as the P/B is low enough to get a Graham Number of less than 22.5? Or is there something extra that we should look at if a Graham Number of less than 22.5 comes from a relatively high P/E (or P/B)? Thanks!

Posted by Intelligent Investor > 2014-08-10 23:37 | Report Abuse

Hi chongket,


Graham Number is designed to quantitatively assess any stock that meets the Defensive qualitative requirements, regardless of sector or industry.


A public utility company that is typically low on Earnings will need a higher than average asset figure to justify its price.
A Financial Services company that is typically low on assets will need a higher than average Earnings figure to be an acceptable investment.