An investment method is more useful when we understand the problem it tries to solve. These six approaches direct attention to different evidence: asset values, business economics, an observable growth story, systematic selection, financial health, or the cost of investing itself. Their differences help us decide which questions belong in a particular assessment.
Benjamin Graham and asset value
Graham’s asset-value approach investigated securities selling below the value represented by their assets. In his March 1976 interview, he discussed buying groups of stocks at roughly two-thirds of working-capital value, emphasizing a group approach rather than dependence on one exceptional prediction. Our adaptation adds explicit checks on asset recoverability, cash consumption and how shareholders might realize the value. This describes one Graham approach, not his entire body of work. Read Graham’s interview, printed pages 36–38.
Buffett and Munger on durable business economics
Berkshire’s letters connect value to competitive durability, capital requirements and purchase price. Buffett’s See’s Candies discussion illustrates a business that could increase earnings without committing comparable amounts of additional capital. His 1992 letter explains that growth helps owners only when the returns on the capital supporting it justify the investment. Our research asks why attractive economics should persist and how much reaches each share. A fixed profitability threshold would be our screening choice. 1992 letter and 2007 letter.
Peter Lynch and the business story
Lynch’s account of discovering L’eggs began with a familiar product and continued with research into distribution, profitability and competitors. In the same interview, he discusses financial survival and how far a company has progressed through its expansion opportunity. Our adaptation turns an observation into a testable question: which part of the company benefits, and what evidence connects that benefit to shareholder economics? Familiarity identifies a lead; our process still requires financial and valuation work. Lynch’s Fidelity interview, pages 3–6.
Joel Greenblatt and repeatable selection
Greenblatt’s Magic Formula seeks good businesses available at attractive prices through systematic selection. Its official implementation also specifies portfolio behavior: equal dollar allocations, at least 20 securities and approximately annual holding periods. Those details matter when interpreting the method. Our proposed quality-and-value screen is a research reference; selecting a handful of companies for deeper investigation creates a different implementation whose judgments must be recorded and evaluated separately. Official method introduction and implementation FAQ.
Joseph Piotroski and financial strength within value
Piotroski’s original study applied nine binary financial signals within the highest book-to-market group. The signals cover profitability, financing and liquidity, and operating efficiency. The context is essential: the research addressed differences among value firms. Applying the score to every company, changing its thresholds, or adding it to another screen creates a new adaptation. Our question is whether it helps the same underlying strategy enough to justify the additional restriction. Piotroski’s original paper.
John Bogle and the cost of complexity
Bogle emphasized broad diversification, long holding periods and minimal costs. His framework supplies a demanding alternative to stock selection. We use additional S&P 500 exposure as this project’s comparison, recognizing that it represents a particular market rather than every available investment. An accessory must justify its concentration, taxes, costs and research burden. Bogle’s 2004 Convergence speech.
Our framework preserves these approaches separately. Combining them into one score would conceal their disagreements. Each proposed adaptation needs its own rationale, evidence and evaluation before it becomes a dependable part of the process.