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# Benjamin Graham Formula

The Benjamin Graham Formula is a mathematical formula that was devised by finance legend Benjamin Graham. The formula is designed to provide a margin of safety when investing in stocks, and it works by taking into account the intrinsic value of a company’s shares and comparing it to the current market price. If the intrinsic value is greater than the current market price, then the stock is considered to be undervalued and may be a good investment. However, if the intrinsic value is less than the current market price, then the stock is considered to be overvalued and may not be a good investment.

When using the Benjamin Graham Formula, investors must first calculate the intrinsic value of a stock using various financial metrics such as earnings per share, book value per share, and dividend yield. Once the intrinsic value is calculated, it can then be compared to the current market price to determine whether or not the stock is under- or overvalued. If the intrinsic value is significantly higher than the current market price, then the stock may be worth investing in. However, if the intrinsic value is only slightly higher than the current market price, then the stock may not be a good investment.

The Benjamin Graham Formula is a valuable tool for investors who are looking for stocks that are undervalued by the market. By taking into account both the intrinsic value and the current market price, investors can make more informed decisions about which stocks to buy and sell. However, it is important to remember that the formula is not perfect and should be used as one part of a larger investment strategy.