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© Tracy O

Serious investors read the work of Ben Graham to learn about finance and investing. Graham is known as "the father of value investing" and the "Dean of Wall Street". He excelled at making money in the stock market for himself and his clients without taking big risks. His ideas were based on his diligent and almost surgical analysis of companies, using simple yet effective logic to build a successful method for investing.

He was Warren Buffet's mentor, and one of the first to use financially analysis to successfully invest in stocks. He lost most of his money at a young age in the stock market crash of 1929 and the Great Depression, which prompted him to hone his investment techniques. This experience led him to focus on reducing risk by buying shares of companies whose shares traded far below liquidation value.

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Ben Graham is the man who developed the Graham number equation. He was a former mentor of Warren Buffet and the so-called godfather of value investing. The Graham Number is the maximum price an investor should pay for a stock. It is derived from two data points: current eps and current book value per share. When you apply the Graham number as a market filter, there are a few companies that show up as being undervalued based on this metric.

Many of these companies are in the technology and telecom sectors. For example, there is SK Telecom Co. Ltd in the wireless communications industry, with a potential upside of 35% from the current market price to the implied Graham number price. AT&T in the telecom services industry is also undervalued based on the Graham number, with a potential upside of 33.5% from current market price.

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The father of value investing, Ben Graham wrote The Intelligent Investor as a guide for the lay investor. Reading this value investing book is a must for those that want to understand why holding stocks are better than bonds and real assets most of the time, and why one should not simply hold the most popular and most publicized stocks.

© brewbooks

Another good value investing book is Common Stocks and Uncommon Profits, by Philip Fisher. This book carefully examines the mindset of the buy and hold investor, and why patience is a virtue in investing when the stock has been carefully chosen.

Buffetology, by Mary Buffet and David Clark describes the investment philosophy of Warren Buffet, and how he has adopted certain aspects of both the Graham and the Fisher schools of value investing while introducing his own innovations.

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