‫Welcome back.
‫In this lecture, I'm going to share two broad strategies in value investing, these are the strategies
‫followed by some of the greatest investors of our times.
‫And in this course, we are going to try and understand these strategies one by one.
‫In the current video, I'm going to briefly describe these strategies and then in the next few sections,
‫we are going to look at these strategies in greater detail.
‫By the end of the course, we are going to use these strategies as a core to define an investment framework.
‫You will be able to use this investment framework to evaluate any stock for long term investing.
‫The first strategy we are going to discuss is known as the Benjamin Graham strategy.
‫It is also sometimes referred to as the cigarette bird strategy.
‫This strategy involves buying Bessant businesses at bargain prices.
‫These are companies which typically have low debt, they have a price to book value ratio of less than
‫one point five, the price to earnings ratio is less than 15.
‫And in no case is the multiple of their price to book value and price to earnings ratio is greater than
‫twenty two point five.
‫We look at the strategy in greater detail in the next video.
‫Now, the idea behind the strategy is to buy these companies when they are selling cheap and then sell
‫them in the stock price rises by around 50 percent.
‫The second strategy that we are going to look at is an improvement over this strategy.
‫This strategy is followed by people like Charlie Munger and Warren Buffet and many other successful
‫investors.
‫That's part of the strategy, instead of just focusing on buying these businesses at bargain prices.
‫The idea is to find businesses that have a sustainable advantage.
‫This sustainable advantage is often referred to as mood.
‫So essentially the idea is to buy great businesses at fair prices instead of looking to buy decent businesses
‫at bargain prices.
‫So when you use this strategy, a stock that is trading at a price to earnings of, say, 20 to 25 may
‫also be bought if it is a sustainable advantage.
‫But preference is still to buy these businesses when they hit a rough patch and trade below a PE of,
‫say, 15.
‫Let's starting from the next section, we we're going to look at different aspects of these two strategies
‫will first understand Benjamin Crump strategy and then in a later section will look at mode based value
‫investing.