📖Benjamin Graham
Earnings Stability Criterion
Consistent earnings history indicates business quality.
The company should have a long record of paying dividends and no earnings deficit in the last five years. Consistent earnings are more important than growing earnings.
🏠 Everyday Analogy
📖 Core Interpretation
Benjamin Graham emphasizes durable business quality over short-term noise. A strong model, real competitive edge, and disciplined capital allocation matter more than quarterly excitement.
💎 Key Insight：Stability in earnings signals a resilient business model.
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❓ Why It Matters
Without business-quality filters, investors drift toward stories rather than economics. Durable cash generation is what supports long-term valuation.
🎯 How to Practice
Use a checklist covering moat, management, unit economics, and capital allocation; track long-term cash generation instead of quarter-to-quarter noise.
⚠️ Common Pitfalls
Buying narratives instead of cash-generating economics
Overreacting to short-term operating noise
Ignoring management quality and capital allocation
📚 Case Studies
1
Early Index Fund Adoption (1973)
An investor, inspired by Graham-style discipline and early indexing ideas, buys a low-cost S&P 500 index fund during the 1973–74 bear market.
✨ Outcome：Keeps contributing regularly; by the early 1980s, portfolio recovers and significantly outperforms many actively managed funds.
2
Global Financial Crisis Indexing (2008)
A Graham-influenced saver holds a broad U.S. stock index fund through the 2008 crash, seeing a portfolio decline of over 40%.
✨ Outcome：Continues dollar-cost averaging; by 2013–2014, values surpass pre-crisis highs, validating long-term, low-cost index investing discipline.
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