📖Benjamin Graham
Bargain Hunting Method
The best bargains appear during market downturns.
The true investor does his best work in a declining market, because he seeks values. Real opportunities in stocks come when they are temporarily unloved by the market.
🏠 Everyday Analogy
📖 Core Interpretation
In Bargain Hunting Method, Benjamin Graham focuses on the gap between price and value. Returns come from paying less than what a business is worth, not from guessing short-term market moves.
💎 Key Insight：Declining prices create opportunities for value investors.
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❓ Why It Matters
Ignoring valuation turns even good companies into poor investments. Overpaying compresses future returns and leaves little margin when assumptions are wrong.
🎯 How to Practice
Estimate intrinsic value with conservative assumptions, set clear buy ranges, and act only when price offers a meaningful discount with acceptable downside.
⚠️ Common Pitfalls
Confusing a low price with true cheapness
Using one metric without business context
Overly optimistic assumptions that erase margin of safety
📚 Case Studies
1
Dot-Com Bubble Caution (1999)
An amateur investor, guided by Graham’s limits, refuses to chase soaring tech IPOs with no earnings, keeping to diversified, profitable blue-chip stocks instead of speculative internet companies.
✨ Outcome：Portfolio underperforms in 1999 but avoids the 2000–2002 crash, preserving capital and modestly compounding.
2
Avoiding Subprime Excess (2007)
Following Graham-style limits on leverage and complexity, an amateur investor avoids highly leveraged bank stocks and mortgage-backed securities popular before the housing crash, focusing on strong balance sheets and simple businesses.
✨ Outcome：Suffers losses in 2008 but far less than the market, recovers several years earlier than broad financial indices.
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