Serenity user Honyock57 (Seeking Alpha profile) explains how he was able to construct a Value Investing portfolio using the principles of Benjamin Graham — Warren Buffett's mentor — that returned 30% in 2016.
Please note that Serenity has since published a detailed blog post on Adjusting Benjamin Graham's Price Calculations Today on its stock screeners.
On 12-Feb-2017, Honyock57 sent a message using the contact form.
Hi Serenity, I just wanted to say a big thank you for the service you're performing with your Graham screeners as well as the wealth of information you provide on your site. In late 2015, I started a Graham portfolio, which consisted exclusively of companies that I found on your screener. So 2016 was my first full year, and turned out to be a very good year to start. My year end results were a return of just under 30%, which easily beat the performance of both my more traditional portfolio and the major indices. Here are a few thoughts on my first year with this approach:
I started mainly with companies that met either Defensive or Enterprising criteria. As the year went on, I started diving more into the Advanced Screener, and added some companies that met either criteria, minus one of the criteria.
These (the ones who missed by one of Graham’s criteria) consisted mainly of those who were missing only the dividend threshold. I did so knowing that I was accepting a smaller margin for error, so I tried to be careful here. But that for me, was the beauty of the screener - it let me step outside of Grahams’ criteria, but hopefully in a relatively careful way. This led to selections such as Cisco, Qualcomm, Corning, Tesco, and Chart Industries.
One other deviation was companies that met all criteria for one of the categories, but were too richly priced. I did this after reading a set of posts between you and a reader, in which you discussed the Graham number in relation to current interest rate environment. This led to some more comfort in selecting Johnson & Johnson, an overpriced defensive stock, as well as a couple of others who fell below the 100% threshold for price.
I only ventured into NCAV land a couple of times, both which went well, but I’ve been careful here, it's been mostly out of my comfort zone.
Currently, there are fewer Defensive and Enterprising candidates that look appealing…with the market in general looking overpriced, that’s reflected in those meeting Graham’s criteria. Also, I’m now holding several companies who have fallen out of the Def. or Ent. categories since I bought them. I haven’t necessarily regarded that as a sell signal, just a signal to keep paying attention. I’m currently holding CSCO, MOS, HWCC, TESS, CALM, SYNT, HP, GEOS, OII CUB, JNJ as my main Graham holidings, and little higher in cash than at any time last year.
Also, I’ve found it useful to run companies I was invested in, or am considering investing in within my more traditional portfolio, through your screener, as an added bit of research and perspective. It’s led to selling or cutting back on some I had held, and deciding against others, based on the fundamentals that Graham stressed.
Anyway, just wanted to say thanks and give a roughly one year report on my results from using your site. Thanks for giving us access to Grahams screening info!