Dear,
I am a new user.
I would like to ask why the
NCAV criterion is considered the least reliable one. I thought it was the surest one from the moment we do not consider any multiples and we buy stocks at a real discount.
Kind Regards,
Simari
Submitted by gns. Created on Friday 15th November 2013. Updated on Wednesday 6th March 2019.
Previous Emails
Dear Simari,
Thank you for posting your query on the forum!
The complete email exchange is posted below this reply for the benefit of other users.
Email signatures have been removed for privacy.
Defensive and Enterprising stocks have sufficient historical checks to help protect against accounting fraud.
But NCAV stocks are bought purely on the basis of balance sheet figures, which can sometimes be manipulated.
This is the reason why, in spite of possibly being the most profitable criteria given by Graham, NCAV criteria require the most diversification.
On Oct 30, 2013, Simari wrote:
Dear,
I am an Italian trader on Forex studying to understand better the stock market through the Graham methodology.
I found your website and I would like to ask you how the service works and if I can ask some question in case I have a doubt.
Kind Regards,
Simari
On Sat, Nov 2, 2013 Serenity wrote:
Dear Simari,
Thank you for your interest in Serenity!
Serenity does not deal in forex.
But any questions on Graham's principles are always welcome!
On Mon, Nov 4, 2013 Simari wrote:
Dear,
my question was about the service you offer about the Graham methodology that I started to follow for the stocks selection.
Kind Regards,
Simari
On Nov 7, 2013, Simari wrote:
Dear,
did you get my answer?
Kind Regards,
Simari
On Thu, Nov 7, 2013 Serenity wrote:
Dear Simari,
All questions on applying Graham methodologies to stocks are always welcome!
You can post your questions on the Serenity forum
On Nov 8, 2013, Simari wrote:
Dear,
thanks for the answer.
I tried to replicate the results of some companies that I find in the NCAV screener but I can't.
I used this computation: (Total Current Asset - (Total Liabilities Current and not current + Preferred Equity))/Current Shares Outstanding
Can you please tell me where's the mistake?
Thanks
G. Simari
On Tue, Nov 12, 2013 Serenity wrote:
Dear Simari,
Your calculation is correct.
Could you please point out which stock you did not get the correct result for?
On Nov 13, 2013, Simari wrote:
Hi,
example LIWA, I read on the website Graham price $7.14, using the calculation I sent you and you agreed I get $8.30.
I use current quarters data
Tot. Current Assets 09.30.2013 $265.49
Tot. Liab. $17.99
Current Shares Outstanding $29.83
Preferred Equity $% Minority Interest $0
Kind Regards,
Simari
On Thu, Nov 14, 2013 Serenity wrote:
Dear Simari,
Serenity is currently using Annual figures from 2012.
According to the Annual Numbers for Liwa:
Current Assets: $227.99 Million
Total Liabilities: $14.98 Million
Shares Outstanding: 29.82 Million
NCAV Price: $7.14
On Nov 14, 2013, Simari wrote:
Ok, this was the problem.
A question please if I would like to ask a question about a stock, example it's OK for a Graham criteria and I would like to understand if it has some moat or advantages in comparison to another that also passes the same criteria, how to do?
Is there a room where to speak about that or do you just suggest to follow the rules strictly without asking other and probable not useful info?
Kind Regards,
G. Simari
On Thu, Nov 14, 2013 Serenity wrote:
Dear Simari,
There is no harm in using additional criteria to evaluate a stock.
But Serenity does not support screening using any criteria other than Graham's.
On Nov 14, 2013, Simari wrote:
Dear,
thanks,
may I also ask you if there's a similar service for the European market?
I mean using for example the NCAV criteria the data are susceptible to be analysed in the Graham criteria.
Kind Regards,
Simari
On Thu, Nov 14, 2013 Serenity wrote:
Dear Simari,
Serenity is the only complete Graham analysis tool available today.
Serenity should support European and Australian markets next year.
On Nov 14, 2013, Simari wrote:
Dear,
thanks.
I find very interesting this project, if you need some help please let me know. I write from Italy.
Last question,
in the Graham context the result of a criteria, example the NCAV, is it enough to invest or you should look into further?
Regards,
Simari
On Thu, Nov 14, 2013 Serenity wrote:
Dear Simari,
Thank you for your offer!
Serenity's results are only a starting point. Please do your own analysis before any investment.
NCAV stocks require the maximum diversification since they have the least historical checks.
On Nov 14, 2013, Simari wrote:
Dear,
can you please specify "the least historical checks"?
I read on the website about the 3 criteria but I always thought the NCAV was the surest one from the moment we do not consider any multiples and we buy stocks at a real discount.
Regards,
On Fri, Nov 15, 2013 Serenity wrote:
Dear Simari,
Kindly post your financial queries on the appropriate Serenity forum for the benefit of other users too.
historical checks?
Dear,
can you please specify about "historical checks"?
Sometimes there are stocks that have years back, 5 or more and I do not understand if for historical checks you just mean years of history.
Kind Regards,
Simari
EPS, dividends paid etc
You are correct!
Historical checks refers to - years of positive EPS, years of dividends paid etc.
Why annual data?
Dear,
one more question about NCAV. Why do you use the annual data to get the NCAV price and not the trailing 12monts or quarters?
Is that a problem a 2-3 quarters after the annual filing for example?
Many things happen in between I mean.
Thanks
Interim statements generally unaudited
As a rule, it is always best to use the latest figures available.
However, Graham recommended investing for the long term and did not require frequent revaluations of one's portfolio.
Thus, if a stock met Graham's criteria for with its annual data, it does not necessarily need to be reevaluated every quarter.
So for now, all stocks on Serenity are currently evaluated only with annual data.
Annual filings more strict?
Dear,
thanks for the answer.
One more doubt about that.
I read that annual filings are more strict instead of the quarter ones,
I suppose in terms of rules to follow and checks that are done.
Is it true?
If so the annual data are those ones to use, I would say.
Kind Regards,
G. Simari
GAAP requirements?
Do you mean that the GAAP requirements for Annual reports are stricter than for Quarterly reports?
Joe Ponzio
Dear,
I read a lot, if I do not get wrong it was in the book written by Joe Ponzio ("f wall Street").
My main question is, from the moment we compare the price with the more important assets, if the fiscal year was closed 9 months ago for example,
have I to always use the annual data to compare the price or the quarter data are better because updated (if reliable as annual ones)?
Regards,
G. Simari
Long term
As a rule, it is always best to use the latest data available.
However, Graham evaluated stocks for the long term.
Thus, a stock's evaluation with respect to Graham's criteria should not change much over the span of a year.
Bull market?
Dear,
thanks.
I would like to follow the NCAV, from your experience or from experience of other investor in this period of bull market and after so many years after the Graham times, is it always a good methodology to invest?
Anybody does use it?
Thanks
G. Simari