(Note: If you are just joining the seminar, please start by reading the Introduction)

Forecasting is hard. Yet no matter whether you invest in statistically cheap stocks or Fisher-style high growth companies, you still need to make a forecast for the company’s future that disagrees with the expectations implied in the price of the stock.

Superforecasting gives you a sense of what it takes to be good. Some of it is within your control to improve. In other areas the super forecasters are just born stronger, just as a professional athlete might have better innate athletic ability than an average person.

We have come to the end of the 2025-2026 Value Investing Seminar with this week’s assignment below. I will aim to do this again, starting in the Fall, for the 2026-2027 cohort.

If you want to continue to improve as an investor in a rigorous and systematic way that can still easily fit into your busy schedule, the case-study method is an excellent next step. Check out the fully free case study from earlier this week to see if it’s something that can help you to improve as an investor.

Week 20 final assignment is to read The Mental Game of Poker by Jared Tendler and answer the following questions:

Question 1: What is the author's idea of "The A Game vs. the C Game"?

Question 2: How can you tell if you have deviated from your A-game?

Question 3: What has caused you to deviate from your A-game in the past?

Question 4: What can you do to minimize the frequency and magnitude of deviation from your A-game in the future?

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Wishing your successful investing,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

Reading Michael Shearn’s work shouldn’t necessarily tell you what your own investing checklist should look like. Instead, it should give you ideas and a framework.

You should start building your own checklist early in your investing journey. As your approach evolves, so should your checklist.

For some of you, you are going to want to have an actual checklist that you go through each time, akin to what a pilot does. Others will only refer to it from time to time, as a store of mental models and ideas. Regardless of how you use it, it will be a useful repository of your current investing process.

Note: For those who want to read ahead, our next and final reading will be The Mental Game of Poker by Jared Tendler.

Week 19 assignment is to read Superforecasting: The Art and Science of Prediction by Philip Tetlock and answer the following questions:

Question 1: What are the common characteristics of superforecasters?

Question 2: What are the common characteristics of the average/not very good forecasters?

Question 3: By yourself, predict: Tesla market share of all cars globally by 2030. Explain your reasoning.

Question 4: What ideas from this book can you incorporate into your own investing?

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

I had the privilege to work with and learn from Joel from 2021 to 2024 when I was a young Equity Research associate at Fidelity. He has remained someone that I stay in touch with and think of as a mentor over the years.

One thing that I learned from Joel that became fundamental to my investing philosophy is a focus on long-term predictability of a business. Joel always looked for companies that didn’t change a lot, at least not for the worse, over the long-term. As he used to say in an industry obsessed with the short-term, “some businesses are better than others, and that remains true beyond just the next quarter.”

Another aspect of Joel’s approach that had a lasting impact is his focus on honest and competent management. His fund usually owned 10% of the small companies that he invested in, and I was always impressed how the CEO of each of his holdings made a pilgrimage to Boston once a year to see Joel.

Joel is both one of the smartest people that I know, and also one of the most hard working. When I was working with him 20+ years ago, a few of us junior associates would come in on the weekends. Few PMs did, except for Joel. He was often found in his office, catching up on a pile of 10-Ks and analyst notes.

Note: For those who want to read ahead, our next reading will be Superforecasting: The Art and Science of Prediction by Philip Tetlock.

Week 18 assignment is to read The Investment Checklist by Michael Shearn and answer the following questions:

Question 1: Which aspect of the research process outlined by the author do you think will be the most challenging for you to perform? Why?

Question 2: How would each of the investors that we have studied customize the approach described in this book to their own investment process?

Question 3: How would you like to customize what you learned from this book to your own investment process? Why?

Question 4: How much time do you think it would take for you to learn to be proficient at the author's research process? To learn to master it?

Question 5: Come up with an AI prompt based on Michael’s checklist.

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

I met Anthony when I was a young analyst at Fidelity in the Boston office over 20 years ago and he came to visit us and gave a talk to all of the analysts and PMs. The story that stuck with me was when he put up his track record in the beginning of the talk and pointed out the 3 consecutive years of underperformance in the early 1990s.

Anthony then told us that had those been his first years as opposed to being preceded by a decade of good returns, Mr. Johnson would quite likely have fired him and he would not be standing in front of us that day. This made me think about how much randomness there is in investing, even if there is still quite a bit of skill involved.

Anthony’s style to me has some elements of both Peter Lynch and John Neff. His emphasis on visiting undiscovered companies reminds me of Peter’s “turning over rocks” analogy. On the other hand, he frequently seemed to look for inexpensive stocks based on current profits and cash flows, similarly to John Neff.

Note: For those who want to read ahead, our next reading will be The Investment Checklist by Michael Shearn.

Week 17 assignment is to read Big Money Thinks Small by Joel Tillinghast and answer the following questions:

Question 1: Please “map” Joel as an investor on as many dimensions of an investment style as possible.

Question 2: What about Joel’s background and circumstances made his approach the right one for him?

Question 3: What are your favorite Joel investments? Why?

Question 4: What are your least favorite Joel investments? Why?

Question 5: What are 1 or 2 stocks that Joel might find attractive in the current environment?

Question 6: Come up with an AI prompt based on Joel’s approach.

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

A quick announcement: the first case study in the new weekly series, The 10-Minute Investment Autopsy, is out. You can read it here. This series is a great way for serious investors to continue to improve in a time-efficient way once the know the basics.

Onto John Neff. In my mind, Neff is a great example of a classic large-cap value investor. He looks for stable, predictable businesses. He doesn’t mind boring. And he insists on paying a low P/E.

A few things about Neff’s approach are worth noting. Since he is mostly a reversion to the mean investor, his holding period is medium in length. That makes sense - if he is right, the price to value gap isn’t going to stay open for decades in the most efficient capital markets in the world.

His approach exhibits a relatively high batting average with a moderate return on successful investments. You are just not very likely to find a large-cap stock trading at less than 50% of value. However, Neff demonstrates that he was able to find quite a few that were trading in the 60% to 75% of value range, resulting in good, but not spectacular, returns on his successful investments.

The math work both because he is more right than wrong (batting average) and because when he is wrong his losses are usually small. That’s different than an early stage Fisher-style investor who might have a lower batting average and higher losses on his ‘losers’ that would be more than offset by huge winners.

Neff’s 30+ year record shows that he beat the market by ~ 3% per year. That is probably the gold standard for what a large-cap manager can do over decades in the U.S. Given that Neff retired in the 1990s, I can’t help but wonder:

• How well would his approach work in the current market environment

• How, if at all, would he feel compelled to adjust his process

Note: For those who want to read ahead, our next reading will be Big Money Thinks Small by Joel Tillinghast.

Week 16 assignment is to read Investing Against the Tide by Anthony Bolton and answer the following questions:

Question 1: Please “map” Bolton as an investor on as many dimensions of an investment style as possible.

Question 2: What about Bolton’s background and circumstances made his approach the right one for him?

Question 3: What are your favorite Bolton investments? Why?

Question 4: What are your least favorite Bolton investments? Why?

Question 5: What are 1 or 2 stocks that Anthony Bolton might find attractive in the current environment?

Question 6: Come up with an AI prompt based on Bolton’s approach

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

A quick announcement before we get to Peter Lynch: I am launching what I wish I had along my 25-year journey as an investor: a way for you to systematically study and improve. The Behavioral Value Investor is starting a paid tier here on Substack aimed at serious investors who want to take their investment process to the next level.

The core of the new paid tier will be the 10-Minute Investment Autopsy series – a weekly case study dissecting real investment decisions with a discussion thread for additional learning and Q&A. It’s a time-efficient (think 30 minutes per week) way to be systematic about improving your investing process. You can find more details here, and the first case study comes out next Thursday, February 5th.

Onto Peter Lynch. A superficial reading of Peter Lynch’s investing approach is “buy what you know.” You read stories about going to the mall, seeing where the line is biggest, checking out the product and buying the stock.

That’s a dangerous oversimplification. I think Peter’s point is that all individual investors have an area of knowledge where they have an edge, and that area is the first place they should look to for investing opportunities.

However, there is much more to Peter Lynch than that. One thing that should strike you as you read the book is the breadth of investing patterns that Peter chose to pursue. Stalwarts. Cyclicals. Turnarounds. Long-term growers. They were all there in Magellan’s portfolio.

That kind of breadth is rare and speaks to Peter’s greatness as an investor. My personal favorite investment of his was La Quinta Inn. I love the simplicity:

• It’s a good offering

• It works in a few states

• It should work in a lot more states

• Valuation doesn’t reflect that growth opportunity

No 500-line Excel spreadsheets or 30-page initiation reports. Just a simple thesis that strikes at the heart of the issue and cleanly identifies the mispricing. You can read more about Peter Lynch, including my lunch with him when I was a young analyst at Fidelity, here.

Note: For those who want to read ahead, our next reading will be Investing Against the Tide by Anthony Bolton.

Week 15 assignment is to read John Neff on Investing by John Neff and answer the following questions:

Question 1: Please “map” Neff as an investor on as many dimensions of an investment style as possible.

Question 2: What about Neff’s background and circumstances made his approach the right one for him?

Question 3: What are your favorite Neff investments? Why?

Question 4: What are your least favorite Neff investments? Why?

Question 5: What are 1 or 2 stocks that John Neff might find attractive in the current environment?

Question 6: Come up with an AI prompt based on John Neff’s approach

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

Joel Greenblatt wrote the seminal book on special situations investing that is highly relevant to this day. The key idea is to think about why do mispricings occur?

In the case of special situations, it’s one of two reasons: forced/uneconomical selling or neglect. Some examples:

• A less attractive small division being spun off, leading current shareholders to sell regardless of price

• Using long-dated options (LEAPs) to take advantage of corporate events with high upside and limited downside, as I recently described in the case of Warner Bros. Discovery (WBD)

• Post-bankruptcy equities that are neglected by the market

Now contrast this with what is usually being pitched to you by brokers and media:

• Popular companies that are in hot sectors and/or are doing really well right now

• IPOs or secondary offerings where management chooses the timing, dresses up the financials and hires an army of bankers to spread the word

• Stocks with high recent price momentum that leads to FOMO among many investors

The first set of securities clearly have a much higher chance to be mispriced. It doesn’t mean they are. Nor does it mean that the second set are always bad investments. However, Greenblatt leads us to a rich hunting ground, and now it’s our job to find ideas within it that are attractive and fit our circle of competence.

Note: For those who want to read ahead, our next reading will be John Neff on Investing by John Neff.

Week 14 assignment is to read One Up On Wall Street by Peter Lynch and answer the following questions:

Question 1: Please “map” Lynch as an investor on as many dimensions of an investment style as possible.

Question 2: What about Lynch’s background and circumstances made his approach the right one for him?

Question 3: What are your favorite Lynch investments? Why?

Question 4: What are your least favorite Lynch investments? Why?

Question 5: What are 1 or 2 stocks that Peter Lynch might find attractive in the current environment?

Question 6: Come up with an AI prompt based on Peter Lynch’s approach

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

Human nature doesn’t change much, and yet it’s so important to investing and the markets. That’s what The Money Game teaches us.

It’s not about the specifics of the markets being the same. They usually change. However, the behavioral drivers that cause irrationality to reoccur are a permanent feature of markets.

Two specific ideas that I found useful to my development as an investor, and hope that you will too:

1. If you don’t know who you are, the market is an expensive place to find out. You need to come to the market with a very entrenched process as your true north, or you will pay a hefty tuition to the market for learning as you go.

2. Identity. Anxiety. Money. In that order. So many of our actions are driven not by money per se or by some cold-blooded calculation of expected value. Instead we encounter a reality that challenges our self-image, our identity. That causes us anxiety and affects our actions. The money comes last.

Note: For those who want to read ahead, our next reading will be One Up On Wall Street by Peter Lynch.

Week 13 assignment is to read You Can Be a Stock Market Genius by Joel Greenblatt and answer the following questions:

Question 1: Please “map” Joel as an investor on as many dimensions of an investment style as possible.

Question 2: What are the different kinds of special situations that he describes? Which of these areas do you think are likely to be more efficient (less prone to mis-pricings) today? Which ones less?

Question 3: Find as many current “special situations” from the categories provided by Joel as you can. These do not have to be undervalued, just candidates to look at further that fit the templates that he describes in his book.

Question 4: If you can, see if you can find one of these special situations that you found in question 3 that you think Joel Greenblatt would consider to be attractive for purchase today. Support your answer with valuation and qualitative analysis as appropriate.

Question 5: Come up with an AI prompt based on Joel Greenblatt’s approach

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

What I hope you got from reading The New Money Masters by John Train is the diversity of styles that can be successful in the market. What also came through to me when I read it was the impact that people’s personalities and backgrounds had on their investing approach.

As you continue to evolve as an investor, don’t worry about what’s ‘best’ in a vacuum. Rather, think about where your strengths naturally are and how to accentuate them, as well as any weaknesses you might have and how to mitigate them. In other words, learn from others but stay true to who you are.

Note: For those who want to read ahead, our next reading will be You Can Be a Stock Market Genius by Joel Greenblatt.

Week 12 assignment is to read The Money Game by ‘Adam Smith’ and answer the following questions:

Question 1: What can you learn from the book about how human nature affects investing?

Question 2: What insights about the time period described in the book are applicable to today’s market, and in what way?

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next year,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

One of the most important factors in Warren Buffett’s success is his ability to evolve. Had he stayed a pure disciple of Benjamin Graham, it is likely that his returns would have been a pale shadow of his actual record.

Why?

Two reasons. First of all, the markets changed over time, and with them the opportunities available to investors. The net-nets that Graham is so famous for largely disappeared, and if an investor insisted on largely restricting themselves to them they would not do nearly as well as they might have in Graham’s days.

The second reason is that even though Graham was an amazing investor, he did not possess all the investing wisdom out there. Buffett recognized that, in part through experience and in part through the influence of Charlie Munger and Philip Fisher.

As much as Buffett successfully evolved, it is important to note the ways in which he hasn’t changed. Despite the crowds of people running around paying very fancy prices for good businesses, he has resisted that temptation. He still insists on both high business/management quality and a good margin of safety in terms of the gap between price and his conservative estimate of intrinsic value.

This is all the more ironic since his most-misused quote, the one about “buying great companies at a fair price rather than fair companies at a great price,” has led many others to deviate from what Buffett actually does and to frequently overpay.

In that regard, as in many others, one of Buffett’s greatest assets and a big reason for his success is near-infinite patience. He is much more comfortable doing nothing for uncomfortably long periods of time than most investors. That temperament is as big an explanation for his amazing results as his actual process, intelligence or experience.

Perhaps that’s why, for all the multitudes quoting and trying to copy Buffett, there hasn’t been anyone who has come even close?

Regarding Question 1 James wrote: “The similarities were that the approach of a margin of safety, and not paying too much. Looking out for value and special opportunities with convertible shares, and underpriced bonds continued to feature in the new vehicle.

The differences were in the long term approach for shareholdings, buying things “forever” and assessing their potential on that basis. The increasing preference for buying whole businesses, both for tax efficiency, and management control. The expansion of insurance as a way of gathering funds for further investment at a very low cost of capital. This is by its nature a very long term game, but the cashflow profile is the best in any industry anywhere.

Purchases are seen for their “lookthrough value” meaning the share of underlying earnings being bought by an investment, regardless of whether it was being paid out as a dividend, used for stock purchases or held for further internal investment. He concentrated on growing this value at least 15%, with the view that the stock market would eventually reward him by valuing these earnings on a decent multiple, and not caring very much as a low stock price enabled him to buy more earnings power for a lower cost. His line is that only “Disinvestors” benefit from high prices, as they are the ones who want to sell. Everyone else should be happy. In the partnership years he would be selling when the price reached his target to reward his Partners.”

Regarding Question 2 Navin wrote: “Similarities : Buffett always sought a margin of safety and mispriced opportunities; the underlying discipline of buying below intrinsic value persisted even as the type of business he bought changed. Concentration and long term mindset etc.

Differences : In the later days, he favored durable competitive advantages and predictable cash flows , probably a shift strongly influenced by Charlie Munger’s emphasis on quality over bargain price

In the 1980 shareholder letter Buffett explained that when he found attractive opportunities he would borrow at high rates (around 12%) to increase purchasing power accepting the interest cost because the expected return on the investments justified it.”

Regarding Question 3 James wrote: “Despite my comments below he was remarkably good at finding exceptional businesses with exceptional management and retaining both for decades of strong performance.

GEICO: Happily it was his very first investment as a sign of things to come. It was a remarkable investment because it both generated massive funds as float, and was so competitive that it also generated a very good profit as well. This kind of double return was one of his most effective ploys, and is very hard to find in the world. Only one other comes to mind: It was one of the reasons that being a Name at Lloyds of London was so lucrative for so long, your investments earned money as investments, and collected underwriting profits from their collateral role as well. Many of the names collected their two checks for one set of capital every year between the mid 1960’s and the mid 1980’s without ever being called on to payout on a claim during the whole 20 years. Alas the late 80’s saw huge claims, followed by the collapse of the system. It failed to work very well when the money was actually needed, and the Corporation itself had to rescue the worse hit syndicates and names.”

Regarding Question 4 J. Rupert wrote: “- Dexter Shoe: Banked on the longevity of producing a single product that could be produced by cheaper labor offshore. I still wonder if this was lack of attention to changing global landscape and its effects.

- General Reinsurance: Although it resolved, this was a time eater, complicated and messy. Not sure he would have bought it if he had been more aware of the complicated derivatives.”

Note: With the holidays coming up, the next assignment will not be due in a week, but rather in 3 weeks, on Thursday, January 8^th. I will plan to post assignment 12 on Friday, January 9^th, but if you want to get a head start on the reading it will be based on ‘Adam Smith’s’ The Money Game.

Week 11 assignment is to read John Train’s The New Money Masters and answer the following questions:

Question 1: For each investor, map them on as many dimensions of an investment style as you can.

Question 2: Who is your favorite investor, and why?

Question 3: Least favorite, and why?

Question 4: Come up with an AI prompt based on any of the investors that you have read about in the book.

Happy Holidays to you and your families!

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next year,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

Buffett started out the partnership years as a Graham-style value investor. However, as Brett Gardner points out in Buffett’s Early Investments he was also very much an activist investor or at the very least was looking for a catalyst to realize the value.

This is well illustrated in the Sanborn Maps case. This was a classic Graham stock – it was selling at a discount to the portfolio of blue-chip stocks that the company owned. The map business, which was troubled, was completely irrelevant to the investment case.

There was only one problem – the stock was trading to the discount of the market price of the security portfolio. That price could change. So, unless the portfolio were liquidated soon Buffett would be taking on a risk that the discount would vanish, or worse yet reverse.

Rather than passively waiting, he astutely made the management an offer they couldn’t refuse. He probably didn’t phrase it that way, but it might have sounded something like this:

“Guys, I get that you want to sit there and collect your paychecks. I also get that the security portfolio, which you have no legitimate reason to hold, helps your job security given the troubles in the business itself. So let me make it easy on you: give me, and any other shareholder who wants it, the option to receive their share of the securities, and you can keep the business (and your paychecks) for free.”

The shrewd understanding of the human element of incentives and how they drive business behavior, allowed Buffett to convert what might have been a long slog with an uncertain outcome into a quick, high-IRR win for the portfolio.

Regarding Question 1 Navin wrote “Generals: Investments in broadly undervalued securities bought for their margin of safety and long term appreciation, often moving with the Dow but delivering superior results over time despite vulnerability in downturns.

Work outs: Special situations driven by corporate actions like mergers, liquidations, reorganizations, spin-offs, etc that provide predictable, stable returns, often insulated from general market swings and sometimes financed with modest borrowing. These are securities whose financial results depend on corporate action rather than supply and demand factors created by buyers and sellers of securities

Control situations: Large or controlling stakes in companies aimed at influencing policies, requiring multi year horizons and patience, occasionally evolving from generals when prices stay low long enough to accumulate significant ownership.”

Regarding Question 3 James wrote “The early years were a straight application of Graham’s principles. Gradually, however, he became more aware of quality and management and more prepared to buy a business and do real work on it to improve it, something that Graham never did. Finally he went the whole hog and started to buy entire businesses. Towards the end of the letters, he makes an admission that I found to be probably the most revealing thing he says in the letters:

“Interestingly enough, although I consider myself to be primarily in the quantitative school (and as I write this no one has come back from recess - I may be the only one left in the class), the really sensational ideas I have had over the years have been heavily weighted toward the qualitative side where I have had a “high-probability insight”. This is what causes the cash register to really sing. However, it is an infrequent occurrence, as insights usually are, and, of course, no insight is required on the quantitative side - the figures should hit you over the head with a baseball bat. So the really big money tends to be made by investors who are right on qualitative decisions but, at least in my opinion, the more sure money tends to be made on the obvious quantitative decisions.”

Quite. And putting this together with his increasing difficulty finding quantitative winners, this is admitting that he had outgrown Benjamin Graham and knew that numbers alone were increasingly not the answer.”

Week 10 assignment is to read Buffett’s Berkshire Hathaway annual letters and answer the following questions:

Question 1: What were the differences and similarities between Buffett’s investing during the Partnership days as compared with the Berkshire Hathaway days?

Question 2: What were the differences and similarities between Buffett’s investing during the early days at Berkshire Hathaway vs. the later years?

Question 3: What were your favorite investments that Buffett made? Why?

Question 4: What were your least favorite investments that Buffett made? Why?

Question 5: What aspects of Buffett’s approach would you like to incorporate into your process? Why?

Question 6: What aspects of Buffett’s approach would you rather not incorporate into your process? Why?

Question 7: How would Buffett invest today if he were managing $100M?

Question 8: Please put Buffett on as many dimensions of investment style as possible, and talk about how, if at all, he has changed his positioning on that dimension from the early partnership days to now. Use 1-10.

Question 9: Come up with an AI prompt based on Warren Buffett’s investing approach.

Note: Our next reading will be John Train’s The New Money Masters. It can take some time to obtain so I suggest ordering early.

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

I wonder how much of the differences between Graham’s and Fisher’s styles was due to their personality vs. the environment that shaped them as investors. Recall that Graham started before the Great Depression and the Crash of 1929, and his cautious approach was heavily influenced by that experience. Fisher, on the other hand, came into his prime after World War 2, amid a recovering economy and a new optimism that emerged in the 1950s.

One important thing to understand is that in a way there is far more that the two investors have in common than what separates them. Both are intrinsic value investors who think about buying a stock as a partial ownership stake in a business. That is very different than the speculators of various stripes who mostly care what someone else will pay regardless of value.

Beyond that, the two investors had major differences. Fisher was all about the qualitative, with management a key factor in his approach. He was looking for exceptional outlier companies that could defy the forces of economic gravity for decades to come.

Graham, on the other hand, was looking for margin of safety in terms of current assets or a past earnings record supported by a resilient business. His posture was to guard against future developments since all he required was reversion to the company’s prior earnings mean to make his return.

The two investors, Graham and Fisher, define the continuum of intelligent long-term investing. Most other successful approaches that I have encountered have elements of both of these two great investors’ processes.

Regarding Question 1 PatrickL wrote: “I see overlap between Fisher and Graham in that both want to understand a business and avoid permanent loss. Where they differ is in what they focus on. Graham leans more on numbers and cheapness. Fisher leans more on long-term growth and the qualities of the business. Graham is fine owning average companies at good prices. Fisher wants exceptional companies even if they don’t look statistically cheap. Both approaches can work depending on what you are trying to do.”

Regarding Question 2 Navin wrote “From Benjamin Graham, I would adopt the principle of a margin of safety and his disciplined, quantitative approach to valuation. His focus on fundamentals like earnings and book value helps avoid speculation and ensures capital preservation.

From Philip Fisher, I would take his qualitative lens—evaluating management, innovation, and competitive advantage—and his long term growth mindset. Holding outstanding companies for decades allows compounding to work, blending Graham’s protection with Fisher’s upside.”

Regarding Question 3 James wrote: “Fisher’s margin of safety is about buying a company that is so good, and so strong that the investor can sleep soundly even if the share price plunges 70% because he *knows* that the underlying company will continue to grow and that Mr. Market will eventually recognize this. He was not a believer in efficient markets.

Grahams margin of safety is quantitative and conservative. Strong measured current sustainable earnings power or very low price compared to NAV - preferably net net - getting the company ‘for free’”

Regarding Question 4 Helen wrote: “Fisher adds management quality and their ability to adapt to a changing economic environment in a reasonable manner, both financially and in the managerial processes of running a successful company. I think this is fundamental to the selection of investments.”

Regarding Question 5 PatrickL wrote: “I like Fisher’s checklist. It forces you to think about things that don’t show up in the financials, like management honesty, competitive position, culture, and the company’s ability to keep improving. If I added anything, it would be something on capital allocation since that matters a lot today. I don’t think I would remove anything”

Week 9 assignment is to read Buffett’s Partnership Letters (not to be confused with the Berkshire Hathaway letters, those are next). If you search for “Buffett Partnership Letters” in your favorite search engine, you should be able to find them, let me know if you have any issues. Please answer the following questions:

Question 1: What were the three different investment types that Buffett invested in? What do you think about each one?

Question 2: What of what Buffett described would be not possible or be less effective today? Why?

Question 3: What changes have you observed in Buffett’s approach from the earlier days of when he began managing the partnership as compared to the later partnership years?

Question 4: What do you think of Buffett’s decision to return funds to investors? What would have been other alternatives and the pros/cons of each?

Question 5: What was your favorite investment that Buffett made during the partnership days? What made it your favorite?

Question 6: What was your least favorite investment that Buffett made during the partnership days. What made it your least favorite?

Question 7: How did Buffett approach constructing his portfolio and managing risk? What do you like/not like about his approach?

Question 8: Map the Buffett from the partnership letters on as many dimensions of an investment style as you can think of. An example of a dimension: long-term vs. short-term, quantitative vs. qualitative, deep vs. shallow research, etc.

Question 9: Come up with an AI prompt based on Warren Buffett’s Partnership-days approach.

Note: Our next reading will be Warren Buffett’s Berkshire Hathaway Annual Letters. The following week’s reading will be John Train’s The New Money Masters. The latter can take some time to obtain so I suggest ordering early.

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

Note: Due to Thanksgiving, this assignment is due in 2 weeks, not 1, so please post your answers in the comments by Thursday, December 4^th.

Those who have only vaguely heard about Graham rarely understand his approach. They might think all he did was net-nets or have known him only for the “Mr. Market” analogy.

By now, having read all of Security Analysis, you know there is much more to Graham than that.

Graham was a product of his time and experience. Having lived through, and lost money in, the Great Depression, he formulated a careful investing methodology centered around guarding against losses. To him, thorough study of the past was a prerequisite for forming a view of the future. The latter was something to be guarded against, not profited from.

While Graham’s primary approach was quantitative fundamental analysis, he acknowledged the importance of qualitative factors. However, he did not go into much depth on qualitative analysis, so in order to learn how to actually do it we will need to rely on other investing masters.

The overarching summary of Graham’s approach is reversion to the mean. He wanted to buy securities at prices low enough that even if the future were somewhat worse than the past, he would still do OK. He was also a broadly diversified investor, which was consistent with the medium depth of his research and the need for large numbers in order to capture the expected return.

Regarding Question 1 PatrickL wrote: “Graham suggests that when comparing companies in the same field, the best approach is to line up the basic financial numbers side by side over a long period. He wants the analyst to look at earnings records, balance sheet strength, capital structure, and consistency. The point is not to forecast the future but to understand which companies are truly stronger and more stable based on actual history. Graham prefers long-term averages rather than one-year snapshots because short-term results can be misleading.”

Regarding Question 2 James wrote “He says “The determination of the respective merits or attractiveness of common stocks at their prevailing market prices is the final an most difficult stage of the full-scale comparative security analysis. He says that the usual observation is that the qualitative factors favor the higher priced company, but the price favours the lower quality company, and “The analyst must accustom himself to this contrast or contradiction, because it is typical of stock-market behaviour.” He says in making this judgement “We believe that on the whole the market tends to exaggerate the significance of qualitative differences and thus to set too high a price” on higher quality companies..”

Regarding Question 3 Navin wrote: “Graham’s playbook is about systematically hunting mispricing with conservative assumptions and repeatable filters. He focuses on Net-nets and asset bargains i.e Stocks trading below net current asset value (NCAV) or below conservative liquidation value. He looks for Stability i.e 10-year earnings history with no large losses, and stable dividend history. Finally, Margin of safety i.e big discount to conservative intrinsic value.

Markets today are shaped less by hard assets on balance sheets and more by intangible drivers—software, data, brands, networks, and customer relationships—that don’t neatly appear as book value. Faster capital cycles mean advantages can emerge and erode quickly. Idea is on preserving his core—margin of safety, disciplined underwriting, absolute-return focus—while upgrading the toolkit to measure intangibles, cash flows, and competitive durability, and to react thoughtfully to quicker industry shifts.”

Regarding Question 5 PatrickL wrote: “My overall assessment is that Graham’s approach is still extremely useful. His focus on downside protection, long-term thinking, and conservative financial analysis stands up well even today. The parts I want to incorporate include using long-term earnings records instead of short-term numbers, checking balance sheet strength, and always thinking about the margin of safety. The part I would modify is being more open to high-quality, asset-light companies whose value comes from things like brand, network effects, or intellectual property. Those types of companies did not exist in his era in the same way, so I want to combine his discipline with a more modern understanding of competitive advantages.”

Week 8 assignment is to read Philip Fisher’s Common Stocks and Uncommon Profits. Due to Thanksgiving, this assignment is due in 2 weeks, not 1, so please post your answers in the comments by Thursday, December 4^th. Read the whole book, it has 3 sub-books, and answer the following questions:

Question 1: What are the similarities between Fisher’s investing philosophy and Graham’s? What are the differences?

Question 2: What aspects of each, if any, would you like to make part of your own approach?

Question 3: How would Fisher define the margin of safety for an investment? How does that compare with how you think Graham would define it?

Question 4: How does Fisher approach valuation? What do you think about his approach?

Question 5: What do you think about Fisher’s checklist for assessing a company? Are there items you would add? Remove?

Question 6: What are the 3 most important criteria from Fisher’s list and why?

Question 7: If you were trying to generate potential candidates for the type of companies that Fisher is looking for, how would you go about it?

Question 8: Find 3 potential investment candidates that you think currently fit Fisher’s criteria and explain why they do so. Please go in some depth in your analysis/explanations for why they are a potential fit using Fisher’s criteria.

Question 9: What are the weaknesses of Fisher’s approach?

Question 10: Map Fisher on as many dimensions of an investment style as you can (use this article for reference on the dimensions: https://behavioralvalueinvestor.substack.com/p/build-your-own-investing-style-learn)

Question 11: Come up with an AI prompt based on Phil Fisher’s approach.

Note: Our next reading will be Warren Buffett’s Partnership Letters.

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until 2 weeks from now,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

When I was just starting out as an investor, 25 years ago, I used to think that if a stock traded below book value it was probably a bargain. How things have changed.

The reality is that even back in Benjamin Graham’s days, a stock trading below book value was an invitation to do further work, not a sure-fire sign of an undervalued security. After all, remember that book value is just the historical amount of equity capital that went into the business. It tells you little about what that business is now worth under its current competitive reality.

Investors who have only come across Graham’s work superficially typically know him for his “net-nets.” Hopefully if you have read Parts 1 through 5 and answered the questions in this seminar, you know by now that there is a lot more to Graham than that.

However, even Graham’s “net-nets” are frequently misunderstood. People want to make them into a mechanical, formulaic calculation that is black and white. That is not the case. Reality is more complicated than that.

When you look at Graham’s suggested table for calculating liquidation value below, did you understand a) why these balance sheet items need a discount b) why the discount is increasing as you go down the table and c) why the range is getting wider?

Source: Security Analysis, Benjamin Graham, 6^th Ed, Pg. 560

Pause for a minute and try to answer those questions.

If you had trouble, consider different business types that might be undergoing a liquidation. For example, what would demand a bigger haircut: the inventory of a teenage apparel retailer that ran into trouble, or a seller of gold coins?

Or if you are considering the discount applicable to Property, Plant & Equipment, think about whether a greater discount would need to be applied to PP&E that has many alternative uses as opposed to highly specialized equipment?

Even though this is what Graham is most known for, and most investors treat this as a purely quantitative calculation, I hope that by now you appreciate how much qualitative judgement is still involved. Never let formulas replace a fundamental understanding of the business, whether you are following Graham’s approach or a completely different one.

Regarding Question 1 John wrote: “Ideally, book value anchors valuation in fact, not forecast. It measures the tangible capital behind a share and (should) offer a margin of safety when prices fall below that base. However, by the time you see a book value, it’s already old and dated - it captures the past, not earning power. A business is worth what its assets can produce in the future, not just what they cost in the past. At best, book value protects the investor by giving them a valuation floor, but it rarely tells the whole story”

Regarding Question 2 Navin wrote “Graham emphasizes that even if book value is often not a determining factor, it deserves “at least a fleeting glance” before buying or selling. This aligns with the margin of safety principle: assets provide a cushion against downside risk.

Today, it’s appearing less central but still valuable as a reality check in asset-heavy or distressed contexts.”

Regarding Question 3 PatrickL wrote: “Graham’s liquidation process is basically a very conservative mark-to-reality exercise. He takes the balance sheet and applies heavy haircuts to most asset categories. Cash stays at full value. Receivables get discounted. Inventory is marked down a lot. Other current assets get cut in half. Fixed assets are marked way down because they usually don’t sell anywhere close to book value in a forced situation. Intangibles are left out. Then he subtracts all liabilities. The goal is simply to make sure the investor is protected even if things go badly.”

Regarding Question 5 James wrote: “Many, many, many:

1) liquidation estimate of value too high: sometimes things are sold for a song, far lower than expected, or seems reasonable: even assets that are very tangible, like property, can realise far less than expected.

2) It can take a very long time to liquidate a complex company. LCTM which went bust in 1998 took decades to liquidate, and I once received a check from a supplier who had gone bust nearly 30 years previously, and had a land asset that was eventually sold.

3) Dilution, capital raises, or sale of the whole for very little.

4) Expenses of liquidation can eat up the margin of safety. Legal fees, liquidators fees, surveyors fees, banking fees, and the listing fees, are all substantial, and accumulate over the often protracted process.”

Regarding Question 6 J. Rupert wrote: “Alignment of interest is uber important because their actions and recommendations directly influence the chance of recovery. Will management address inefficient or overly aggressive use of assets that may have increased earnings? Will they consider new ownership or mergers to optimize asset utilization? If all else fails, would they accept reality and liquidate, prioritizing the financial well-being of debt and equity holders, even at the loss of their own jobs? If there is trust in the management to make these potentially unpopular decisions, they may not be depended on to assist in the turnaround.”

Week 7 assignment is to read Part 7 of Security Analysis and answer the following questions:

Question 1: How does Graham suggest we approach comparing companies in the same field?

Question 2: What are some limitations/pitfalls of such comparisons?

Question 3: How does Graham suggest we go about uncovering investment opportunities? How would you adapt his approach to the current environment?

Question 4: Where is Graham’s approach located on the different “dimensions” of an investment style? Try to find as many dimensions as you can and think about where Graham is on each. Use a scale of 1 to 10 and indicate what each extreme means for each dimension. Then think about where you would like to be on each (and why). If you need inspiration for dimensions, read this article.

Question 5: What is your overall assessment of Graham’s investment approach? Which aspects of it would you like to incorporate into your own? What changes do you want to make? Why?

Question 6: Find one security of any kind that you think that Graham would conclude currently has a large margin of safety based on his approach outlined in Security Analysis. Please provide a brief qualitative and quantitative analysis supporting your view that Graham would be proud of.

Note: Our next reading will be Philip Fisher’s Common Stocks and Uncommon Profits.

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

Many of you have been curious about how to use AI for investing purposes, so I want to highlight an article that I just published, How AI Helps Me Combat Confirmation Bias (And Research Faster), where I do a deep dive into how I have integrated AI into my investing process and share all of the prompts that I use.

Shifting topics to Part 5 of Security Analysis, when thinking about the income statement, it is very important to remember that it is just an estimate. In the accrual system of accounting, we try to match the timing of revenues with the timing of the benefits received by customers and of the timing of costs with revenues. As a result, there is necessarily leeway for management to influence what we see as investors.

That’s not necessarily a bad thing – after all the goal is to present the investor with a close approximation of economic reality. However, it can be misleading either due to management’s intent to mislead or simply due to the natural ebb and flow of business.

When we bring the Balance Sheet and the Cash Flow statements into our analysis, we get a much more complete picture of how the business is doing. For example, consider a company with Net Income of $100 last year. How sustainable is it?

Well, in isolation, that’s a hard question to answer. Now consider two scenarios:

1. That company has Book Equity of $1,000

2. That company has Book Equity of $500

Now we can see that Company #1 has a Return On Equity (ROE) of 10% and Company #2 a ROE of 20%. The typical public company has a ROE of around 10%, close to its cost of equity. The 20% ROE might be a sign that Company #2 is enjoying a temporary boom in profits that is not sustainable. Or it could be a superior business that has earned those returns. At the very least it gives you, as the analyst, something material to investigate.

The point is that bringing the Balance Sheet into our analysis is akin to looking at the world in 3D rather than 2D – you are going to notice much more depth.

I can’t do the topic of analyzing financial statements justice in these pages, so if you want to dive into this deeper, I highly recommend Howard Schilit’s Financial Shenanigans. You will be amazed at how creative management can get with financial manipulation.

Regarding Question 1 Alan wrote: “Graham highlights several issues with relying solely on earnings for assessing a business. The first is that changes in earnings are more volatile than changes in the balance sheet and so without caution can lead to exaggeration in the companies performance. His second point is that earnings are easier to manipulate than the balance sheet. Thirdly he highlights that an important piece of information is the level of earnings that the assets generate.

The less capital a business requires the less important the balance sheet is. However the implication of Grahams framework is that capital light businesses are more likely to have manipulated earnings and/or unstable earnings and so you should be less certain of the earnings. The introduction of cashflow statements since 1939 can help to reduce this issue. At the opposite end of the spectrum are banks which have big balance sheets, in these cases the balances sheets should be more of a focus”

Regarding Question 2 Navin wrote: “Benjamin Graham, in Security Analysis, warned that income statements can be misleading due to non-recurring items, subsidiary and affiliate accounting, and manipulation of reserves and surplus.

Analysts to adjust for these distortions via

• Adjust earnings to exclude one-time or exceptional items for a clearer view of recurring profitability.

• Analyze subsidiary contributions separately to assess core operational performance.

• Monitor changes in reserves over time to identify potential earnings management.

• Validate reported profits by reconciling them with cash flow statements and balance sheet data.”

Regarding Question 4 James wrote: “Graham says “Quantitative data are useful only to the extent that they are supported by a qualitative survey of the enterprise” and he italicises it for emphasis. He says that normally a long record of consistent earnings is enough, but there are plenty of exceptions, such as mining companies running out of good quality ore in its mines, or an exceptionally good or bad period of trading for the economy as a whole. The analyst must not work blindly on the figures alone. A historical average fails to take into account a trend, and it can be manipulated by picking the right starting and end points.”

Regarding Question 5 Peter wrote: “Graham’s rule to not pay more than 20x average earnings was more about discipline than drawing a line in the sand. Valuation is not prediction, but protection. Exact P/E threshold may change with the times and interest rates, but the underlying intent remains the same. Anchor valuation to proven earning power and demand a margin of safety.”

Week 6 assignment is to read Part 6 of Security Analysis and answer the following questions:

Question 1: What are the useful features of using book value as a valuation metric? What are its limitations?

Question 2: When does Graham believe book value to be of practical use to the security analyst? What do you think about that in the modern context?

Question 3: Describe how Graham approaches calculating a company’s liquidation value.

Question 4: Perform Graham’s liquidation analysis for two stocks trading below tangible book value and show all work/assumptions.

Question 5: What are some ways in which you can lose money by investing in a stock below its liquidation value?

Question 6: What is the importance of management when considering stocks that are selling below their liquidation value?

Question 7: Can you find a company that is currently trading at a sufficiently large discount to its liquidation value that if Graham were looking at it today, he would find it an attractive investment? If you can, show your work for why it’s attractive and justify your assumptions.

Question 8: Can you think of a useful AI prompt based on the material in part 6?

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

The simple framework that, embarrassingly, took me a decade into my investing career to figure out is:

The Price Asks the Question

What do I mean? Imagine you have a company that earned $1/share last year and is paying a 25c quarterly dividend. Let’s think about what we would want know to thoughtfully disagree with the prevailing market price:

A. Stock is at 25c. What is the price asking? Will the company survive to pay another dividend

B. Stock is at $1. What is the price asking? Will the company survive for a year?

C. Stock is at $10. What is the price asking? Will the company grow its profits?

D. Stock is at $15. What is the price asking? Will the company grow at above-average rates?

E. Stock is at $20. What is the price asking? Will the company grow at double-digit rates?

By now, you get the point. Notice that the company in question did not change, only the price did. Yet the question you must answer as an investor changed quite a bit.

Think of the stock market as an exam where you do not get penalized for passing on as many questions as you choose. How would you approach such an exam?

The optimal strategy is to only answer questions that you are sure about. If there is any doubt, move on, as there will be easier questions at some point. Or, as my 12 year-old daughter told me earlier today “Papa, if you have to think about it, you probably shouldn’t get it.” OK, she wasn’t talking about stocks, but it still applies.

So when Graham tells us that we can’t say much definitively about a typical stock what he is really saying is: if you pick a random company, the question being asked by the stock market via the stock price isn’t so obvious as to warrant you making the investment. In other words, markets are mostly efficient most of the time and outliers with a sufficient margin of safety where you can thoughtfully disagree with the price are the exception, not the rule.

One common area that beginner investors don’t sufficiently appreciate is the importance of capital allocation. Remember that not all $1 of earnings are same – it depends on what is being done with them.

At one extreme is a management team that can reinvest profits consistently at returns well above the cost of capital and make each dollar worth far more. At the other extreme are management teams that are pursuing empire-building acquisitions that destroy value. In the middle are companies giving the money back to shareholders.

Unfortunately in my almost quarter-century of professional investing my observation is that there are more CEOs who don’t know how to allocate capital well than the are who do. That’s why I wrote The Capital Allocation Guide for CEOs, which is just as useful if you are an investor trying to understand the topic.

Regarding Question 1 Alan wrote: “Graham is saying that for most stocks, it is either impossible to determine their intrinsic value or that the range of possible intrinsic values is too large for it to be useful.

I agree with this statement, but I think the list of stocks that can be valued will be different for different analysts. Some stocks will be impossible for anyone to determine an intrinsic value, likewise there will be stocks where any competent analyst can value. For everything in between the analysts knowledge/experience/resources will change the range of valuations and their certainty of them.”

Regarding Question 2 Atreya wrote: “According to Graham, the history of industrial companies was a hodge-podge of violent changes. This made prediction of earnings almost impossible. This makes both- projecting an earnings growth trend, as well as projecting a company’s level of average earnings dangerous. In my opinion, projecting future earnings growth trend is more dangerous compared to projecting a company’s earnings.”

Regarding Question 3 Spencer wrote: “There are three challenges. The answers to the question posited are best answered in three parts with the first part essentially being a series of difficult questions that Graham puts forth. — Part one: what is the relationship between the growth and the business cycle? Many companies can and do grow during the rise in the cycle, but can and do they navigate the trough? Which of these constitutes a growth company? Both/Neither? — Part two: to what extent is the speculator able to identify companies which will grow through the downturn? This ties back into the answers to question 2 regarding the corporate life cycle. Part three: has the market already priced in these growth expectations? If so there is essentially only two likely outcomes, average return on the investment or disappointment.

Week 5 assignment is to read Part 5 of Security Analysis and answer the following questions:

Question 1: What are the issues with relying solely on earnings to estimate the value of the business? Do you agree? How does this vary for different types of businesses (e.g. capital intensive vs. asset-light)?

Question 2: What are the ways in which Graham highlights that the income statement can be manipulated by the company? What adjustments does he recommend an analyst make?

Question 3: How does Graham suggest an analyst assess the economic impact of depreciation? Amortization? Why?

Question 4: How should Qualitative considerations be used to supplement Quantitative considerations when assessing a company’s past earnings record in order to estimate its earnings power? What is the problem with just using a historical average over a sufficiently long period?

Question 5: How does Graham suggest a common stock investor approach using the P/E ratio to decide if/at what price to invest in a stock? Which parts do you agree with? Which parts do you disagree with? How applicable do you think what he wrote is today? Why?

Question 6: How should the capitalization structure of the company be taken into account when analyzing the income statement? What investment implications does it have?

Question 7: Create an AI prompt based on the material covered by Graham in Part 5 that would aid you in your investing.

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

In Part 3, we are now moving away from high-grade bonds which have limited, defined upside and into a category of securities in between them and equities. While all of the securities mentioned here by Graham offer a wider range of upside than high-grade bonds, they differ in a number of ways.

Securities with speculative features usually combine the characteristics of a bond with that of a call option on the equity. In some cases, as with convertible bonds, the two are inseparable in a single package. In the case of bonds packaged with warrants the call option can be detached and sold separately.

Even though we are approaching Graham’s teachings as investors, we should pause here and put on our CFO hats. Why would we, as a CFO of a company raising capital, issue converts or offer a sweetener to a straight bond in the form of warrants? The answer is simple: because the market won’t let us issue straight debt as a high-grade borrower.

Perhaps it’s because the company has a limited history. Or it does not have the cashflow to support normal coupon payments. It could also be because it has exhausted its regular debt capacity subject to the constraints that would still put it within the high-grade category.

The reason matters less than the point that there is a negative selection bias that companies issuing hybrid securities, as a group, are weaker credits than those able to issue straight high-grade bonds.

To entice the market to overlook the weakness of the credit, the company then has to part ways with a portion of the equity upside. In other words, because the downside is greater, the upside must be as well.

With respect to high-yield or junk bonds, Graham has a very specific approach. He is looking for equity-like returns, which is why he sets the bar by only looking at distressed bonds trading at or below 70% of par value. That would translate into an annualized rate of return over 3-5 years well into the teens.

Finally, preferred stock when purchased near par value combines the worst characteristics of these securities: negative selection bias of weaker issuers with limited upside and few if any contractual protections. To Graham the answer is simple: just pass.

Part 3 also contains one of the most important passages in the whole book. I was confused the first couple of times that I read it, and it took me a bit of thinking to reason it out. I would suggest that if you were not at all confused upon reading it you are either already an expert investor or you haven’t thought about it deeply enough:

As between the two factors, it is undoubtedly true that it is more profitable to select the right company than to select the issue with the most desirable terms. There is certainly no mathematical basis on which the attractiveness of the enterprise may be offset against the terms of the privilege, and a balance struck between these two entirely dissociated elements of value. But in analyzing privileged issues of the investment grade, the terms of the privilege must receive the greater attention, not because they are more important but because they can be more definitely dealt with. It may seem a comparatively easy matter to determine that one enterprise is more promising than another. But it is by no means so easy to establish that one common stock at a given price is clearly preferable to another stock at its current price.

-Page 300 (6^th Edition)

If you unpack what Graham is telling us here, I think you will reach the conclusion that his point is that two random stock whose securities you are comparing are very likely to be efficiently priced regardless of the differences between the underlying companies. For example, even if one business is demonstrably superior to the other, he is saying that the market likely already reflects this in the stock price, and that is the reason we should focus on analyzing the differences in the terms of the securities.

Graham’s point boils down to this: most stocks are approximately correctly priced by the market most of the time.

Also, bringing this back to dimensions of an investing style – this is a key dimension: do you want to be more of a business analyst or more of a security analyst? As we study different investors, keep this important dimension in mind.

Regarding Question 2 Patrick wrote: “He says their long-term record has been poor because the extra features rarely protect investors when things go bad. History supports that. Preferred shares dropped hard in the 2008 crisis, 2020, and 2022 rate spike. Contingent convertibles, or CoCos, and AT1s are a modern version. They pay a high coupon but can be written down or converted in stress. Credit Suisse AT1 holders were wiped out in 2023, and only this year did a Swiss court partly reverse that decision. Convertibles have done better, but many still end up “busted.” So overall, the record fits what Graham warned about.”

Week 4 assignment is to read Part 4 of Security Analysis and answer the following questions:

Question 1: What does Graham mean when he says that as far as a typical common stock is concerned, that analysis is unlikely to yield a dependable conclusion as to the attractiveness or real value of the stock? Do you agree/disagree?

Question 2: Why does Graham believe it is dangerous to project an earnings growth trend into the future? Do you agree/disagree? Is it also dangerous to project a company’s level of average earnings into the future? Why/why not?

Question 3: What are the challenges that Graham identifies with Growth Investing? What are your thoughts on this topic?

Question 4: How does a company’s dividend track record and current policy impact its attractiveness as an investment?

Question 5: When should a company be reinvesting earnings and when should it be paying them out as a dividend?

Question 6: Create an AI prompt based on the material covered by Graham in Part 4 that would aid you in your investing.

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

(Note: If you are just joining the seminar, please start by reading the Introduction)

One important lesson from Part 2 is that the investment approach needs to be heavily influenced by the distribution of returns of the securities in which one is investing. Consider the two extremes: high-grade bonds vs. venture capital.

The distribution of returns among high-grade bonds is as follows: out of 100 bonds you are likely to have a couple that will default and the rest will pay as promised. The ones that default, even with some recoveries, will result in a very large, 50%+ loss. The difference among the ones that don’t default will be very small, usually a percent or so in yield per year.

Your success will not depend on choosing among the bonds that don’t default but rather on eliminating the few that will. In other words, there is almost no penalty for incorrectly eliminating a security that you even remotely suspect could default.

Compare that with venture capital. Here you are likely to have a couple of huge winners with returns of 100x+, some far smaller winners and many large losers. Here, it doesn’t matter how many complete losses you avoid if you don’t catch the one or two 100x returning start-ups. The cost of a mistake of omission, unlike in high-grade bonds, can be huge.

Another lesson that Graham teaches us in Part 2 is that it is better to avoid trouble than to rely on assets to protect us. His concept is to focus on a company’s ability to pay rather than on the collateral supporting a bond. There are several reasons for this, including the time it would take to get your money back in bankruptcy, the frictional costs involved and the uncertainty of the market value of collateral when it needs to be liquidated.

Graham gives us several formulas/criteria to use as a checklist for a high-grade bond. This is probably the part that needs to be updated for modern times and analytical tools. Here is a brief overview of what is used in modern times:

Coverage Ratio

The benefit of the coverage ratio is that it measures ability to pay directly. The numerator should be a measure of pre-tax cashflow available to pay mandatory fixed charges and the denominator should be the fixed charges. The denominator is mostly interest expense, although it can include other items such as mandatory pension contributions or mandatory legal payments.

The numerator is where I think we need to update our approach from Graham’s. Graham used EBIT (Earnings before Interest and Taxes), but that’s too punitive. EBIT subtracts both depreciation and amortization. Most amortization is a non-cash accounting charge (more on this in a later reading). Depreciation is quite real, but here we need to think about the timing of payments.

When looking at interest coverage, we care about the following scenario: the company is in distress, its profitability is depressed and it needs to figure out if it can find enough cashflow to meet its interest payments until its business recovers. Depreciation has a corresponding cash outlay – Capital Expenditures. However, CapEx can be broken up into 2 components: growth and maintenance.

The maintenance CapEx component can mean different things depending on the question being asked. From the point of view of the equity investor, long-term maintenance CapEx is rarely below depreciation. That’s the reason for using Graham’s EBIT approach. However, when the company is in temporary distress and is just trying to make it through to the other side of whatever challenges it is facing, that’s not the relevant maintenance CapEx because much of it can be deferred. So, there is a lower, ‘bare-bones’ maintenance CapEx that is the right number to think about for the purposes of credit analysis.

The complete formula for the coverage ratio would be: (EBITDA – bare-bones maintenance CapEx) / (All Mandatory Fixed Charges). In practice, what we see in modern bank covenants is a simplified ratio of EBITDA/Interest. While it ignores some nuances, it is approximately right, especially if the threshold level is set higher than an EBIT/Interest ratio would be set to account for the numerator being an overestimate of the available cash flow.

Leverage Ratio

While Graham referred to Equity/Debt as the leverage ratio, there is another leverage ratio that is commonly used in credit analysis. While the coverage ratio measures ability to pay directly, its shortcoming is that it is relying on current interest rates.

For example, consider a company that has variable interest rate debt. It might have a coverage of 4x in a low-rate environment, but if interest rates were to spike that ratio would deteriorate substantially. The alternative is the leverage ratio defined as: Debt/EBITDA, which is one of the two ratios commonly seen in modern bank covenants. For context, a BBB-rated industrial company usually has Debt/EBITDA below 3.5x.

As a thought exercise, can you calculate the relationship between the coverage ratio (EBITDA/Interest) and the leverage ratio (Debt/EBITDA) at different levels of debt and different interest rates?

Regarding Question 1 Navin wrote: “Graham writes that “Bond investing is a commitment with limited return”. The chief emphasis on avoidance of loss reflects the reality that any failure by the issuer to meet obligations can result in total loss, making safety the primary concern. The investor may reject bonds with no penalty because passing on a bond does not mean missing out on extraordinary gains, allowing for strict selectivity without regret. Graham uses these phrases to highlight the fundamentally defensive nature of bond analysis, where the art lies in eliminating risk rather than forecasting reward.”

Regarding Question 3 James wrote: “Preferred stock, because the security does not stop poor performance in hard times, and limits the upside in good. Either way it’s a poor proposition, of the “heads I win, tails you lose” sort.”

Regarding Question 5, the biggest thing that I would do differently from most of your answers is ask a lot more qualitative questions. For example, wouldn’t it make a huge difference if the historical profitability of the taxi driver was achieved with a ride-sharing company already operating in the town vs. one just having announced that it is about to enter the market? Also, applying the ideas above, the Coverage Ratio would be 6x (EBIT = $10, Depreciation = $20, EBITDA = $30, Interest = $5). It’s certainly not wrong to use Graham’s stricter standards of EBIT/Interest which would as most of you pointed out be only 2x.

Regarding Question 7 where I asked you to come up with an AI prompt based on Part 2 of Security Analysis, one idea I had was to use a “meta” prompt for idea generation. I created a very simple prompt, as follows:

“Act as an expert on Benjamin Graham and on Security Analysis. Generate 5 prompts based on ideas in Part 2 of Security Analysis that would be useful to a long-term investor. Output: at the top summarize the goal of each of the 5 prompts, then provide the detailed prompts below. reasoning_effort=high.”

Here are the ideas that ChatGPT 5 came up with:

And here is what Claude Sonnet 4.5 came up with:

The point isn’t to fully rely on AI to do your thinking for you, but rather to brainstorm to see what you haven’t thought of and to supplement your own thinking.

Week 3 assignment is to read Part 3 of Security Analysis and answer the following questions:

Question 1: Why does Graham believe that Senior Securities with Speculative Features are typically attractive in form? Do you agree?

Question 2: Graham states that the record of such securities has been unenviable. Why? See if you can do some research about whether that statement has been true in recent times - e.g. the last 20-30 years.

Question 3: What are Graham’s views on the importance of the terms of the speculative features in such securities vs. the prospects of the underlying enterprise? What do you think about this balance?

Question 4: Find a current security that Graham would classify as a Senior Security with Speculative Features. Would Graham consider it attractive at the current price? Why? Do you? Why?

Question 5: Where does Graham place speculative fixed income securities (high-yield bonds/junk bonds) on the continuum between stocks and high-grade bonds? Would his classification be the same in the current market, and if not how would it differ? How does Graham suggest approaching investing in such securities?

Question 6: Are the inefficiencies that Graham refers to for all of these security types still the same today. Why/why not? If not, which ones have become more vs. less efficient?

Question 7: Find a high-yield security and analyze it using Graham’s approach. Would he consider it attractive? Do you?

Question 8: Create an AI prompt based on the material covered by Graham in Part 3 that would aid you in your investing.

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.

I was happy to see how many of you engaged with the reading and the questions in a thorough, high-quality way. Keep it up – while this is not easy reading, it will form the foundation of your investment process. To give you a little encouragement: if you make it past this week’s reading assignment, it gets easier from there.

I just wrote an article answering question 0 from last week’s assignment about the dimensions of an investing style where I list 21 important dimensions. Please take a look at the article, and if you find it helpful, please consider restacking it to help grow our community.

Switching over to Security Analysis, Part 1 and Benjamin Graham, many of you correctly noted that the first edition was written during the Great Depression and not long after the stock market crash of 1929. That had a big impact on both Graham (whose partnership declined a meaningful amount in part due to use of margin debt) and on overall investor psychology.

Graham was not writing to today’s audience of investors who have been conditioned that stocks only go up over the long-term. He was writing to people who had just seen an unprecedented collapse in stock prices and many of whom think that purchasing any stock is a speculation. That is why he felt the need to work so hard to convince his readers that stocks can be an investment and why he laid out such a careful, risk-averse approach to investing.

Before we move on to Part 2 and this week’s assignment, here are some excerpts from some of your answers to last week’s questions that I thought are worth sharing with the community. There were far more insightful answers than I can fit in here, and over time I will try to highlight as many folks’ contributions as possible:

In response to Question 1 Trishit wrote: “The environment around 1933 was characterized by a double discrediting of serious analysis: 1. Persistence of imaginary values [prior to the crash] (pp [61]) and 2. Disappearance of real values [after the crash] leading to devasting effects on established earning power.”

In response to Question 2 Atreya wrote: “Graham’s investment philosophy focuses on finding intrinsic value using definite standards, and purchasing securities at a bargain to the intrinsic value. He thinks its best by comparing it to the chances of failure of other approaches such as market timing- which cannot be done over and over again, or the “new era theory” which became prevalent after 1927, where a study of fundamental aspects of securities were abandoned in favour of spurious metrics espoused by stock promoters. Graham also notes that an investment is for permanent holding. Therefore, most people who buy securities, in the hope of selling it at a later date at a higher price are speculators. Graham’s assertion is that this is the only sensible way to invest as this can assure safety of principal under most conditions and has a reasonable probability of delivering an adequate return.”

In response to Question 3 George wrote: “I admire Graham’s clarity of thought, he knows and can clearly explain what the necessary conditions are for something to qualify as an investment. It is also strongly implied that he has a robust process, perhaps a checklist for evaluating investments. I would benefit from defining my investment philosophy more clearly and bringing more structure to my process.

One area where I suspect that an issue might arise is in finding investments in businesses with ‘inherent stability’ that are priced cheaply in absolute terms. I don’t disagree that these investments tend to deliver good returns, but much of the time such businesses are priced to deliver (see Costco, Autozone currently, for example). There are avenues available to mitigate- compromise on the degree of inherent stability required, accept a lower margin of safety or be able to endure long periods of inactivity/allow uninvested cash to pile up.”

In response to Question 4 Alberto wrote: “Graham defines investment as an operation that, after careful analysis, promises safety of principal and an adequate return. Anything that doesn’t meet these criteria is considered speculation.

The implication, as I see it, is that a careful analysis must be conducted first—one grounded in facts that are knowable and relevant—to determine whether the investment will preserve the principal and offer a return that is adequate compared to prevailing alternatives.”

Regarding last week’s Question 4, I am going to add a thought question: What did Graham mean by “an investment operation” in his definition above? As a corollary, can a purchase of a single security in and of itself be classified as either an investment or a speculation according to Graham? According to you?

Week 2 assignment is to read Part 2 of Security Analysis and answer the following questions:

Question 1: Why does Graham believe that investing in High Grade fixed income securities to be a ‘negative art’, in contrast to investing in common stocks? What does he mean by that? Do you agree?

Question 2: What is Graham’s main idea about what provides safety in a high-grade bond? Do you agree?

Question 3: How does Graham evaluate the safety of a high-grade bond based on the company’s financials? Is there anything you would do differently with what you know today? Why?

Question 4: Which security structures does he believe to be permanently inferior in this category? Why?

Question 5: Miniature Credit Analysis scenario:

- Cab driver has driven a cab for someone else, and now wants to buy his own for $100

- The cab will have a useful life of 5 years, and have straight-line depreciation with no residual value for accounting purposes

- For cash purposes, the cab will have no cash outlays associated with it but will need to be replaced at the end of 5 years, with another cab, which we will assume will also cost $100

- The cab driver has historically averaged EBIT of $10 on his historical revenues of $100, and expects that to continue. There are no taxes.

a) What questions would you like to ask/what would you like to know to assess whether buying a 5-year $100 bond with a 5% coupon meets Graham’s standard for investment in a high-grade bond?

b) Substantiate your answer to a) with specific credit metrics that support your analysis. What metrics are most relevant? Why?

c) What would change in your analysis, if anything, if everything staid the same but the bond had a 3-year maturity? A 7 year maturity?

d) How much would it matter to Graham whether the bond was unsecured or if it were secured by the cab? What about you?

Question 6: Find and analyze two bonds using both Graham’s process and any of your own modifications that you think are reasonable. Provide your analysis of:

a. A bond rated BBB or BBB- by S&P with a maturity at least 5 years away

b. A bond rated A or higher by S&P with a maturity at least 5 years away

Is either of those two bonds a good investment in a) Graham’s view b) your opinion? Why?

Question 7: See if you can think of an AI prompt based on Part 2 of Security analysis that would make your work easier. Suggestion: use a thinking model (e.g. Gemini 2.5 Pro or ChatGPT 5; if the latter set reasoning_effort=high; consider whether you need “Deep Research” mode enabled or not for what you are trying to do).

Now it’s your turn:

1. Submit your answers in the comments below this article with all your answers in a single comment. I will engage with some of the answers each week and highlight some of the ones I find most insightful in next week’s seminar assignment article.

2. Engage with the answers of some of your fellow seminar members in the comments below. Remember – the goal is to learn together. Be kind, be respectful and try to add to our learning as a community.

3. Feel free to ask any questions about the reading in your comment.

Until next week,

Gary

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About the author

Gary Mishuris, CFA is the Managing Partner and Chief Investment Officer of Silver Ring Value Partners, an investment firm that seeks to apply its intrinsic value approach to safely compound capital over the long-term. He also teaches the Value Investing Seminar at the F.W. Olin Graduate School of Business.