How This Works
"The early Greeks used to sit around for days and debate about how many teeth a horse has. They thought they could figure it out just by sitting there, instead of checking the horse. A lot of investors sit around and debate whether a stock is going up, as if the financial muse will give them the answer, instead of checking the company."
-Peter Lynch
Josiah Swanson, the creator of this website, believes in delayed gratification, and his whole goal with Invest With Knowledge! is to help people to see that good companies, over time, perform well!
Here at Invest With Knowledge!, we promote checking the company. Specifically, we promote the discovery of valuable assets that are typically ignored by Wall Street because they sound boring and weird.
Benjamin Graham & The Intelligent Investor
Inspired by the founder of value investing, Benjamin Graham, we base our entire stock selection process on his book,The Intelligent Investor. The book is pretty long and can be confusing at times, but chapters fourteen and fifteen elucidate a stock selection process for aspiring value investors. So, in order for a stock to show up on this site, it must fit the criteria outlined in those two chapters.
What We Look For:
First things first, we filter out all the stocks in the S&P 500. We'd like to spend most of our research time on stocks that most people won't pay attention to.
Next, we apply the criteria outlined by Graham in chapters fourteen and fifteen of The Intelligent Investor. Every stock we report has (at least once) passed the tests given in one or both of the chapters.
Chapter Fourteen Stocks
Chapter Fourteen describes a strategy for the "defensive investor." The criteria are pretty conservative:
• Adequate Size—The business must be resilient to "vicissitudes" ($2B or more in revenue).
• A Sufficiently Strong Financial Condition—The business's long-term debt should not exceed half its equity.
• Dividend Record—There must be a dividend provided.
• Earnings Growth—There should be some growth in per-share earnings in the past five years.
• Moderate Price to Earnings Ratio—The PE ratio should not be more than fifteen.
• Moderate Ratio of Price to Assets—The current price of the stock should not be more than 120% of the book value.
Chapter Fifteen Stocks
Chapter Fifteen describes a strategy for the "enterprising investor." The criteria are relatively less conservative:
• A Sufficiently Strong Financial Condition—The business's long-term debt should not exceed two-thirds its equity.
• Earnings Stability—There should be some earnings for the stock in each of the past five years.
• Dividend Record—There must be a dividend provided.
• Earnings Growth—There should be some current growth in per-share earnings.
• Moderate Ratio of Price to Assets—The current price of the stock should not be more than 120% of the book value.