Let's use the formula

“Let’s use the Formula ”

There comes a time in your life when decision making becomes a bit tricky.

If you need to make money, then you need a clear rationale and a tool by which you can decide if the markets hold long term promise. Imagine if you had a simple formula that gave you an idea about what to do in the stocks market.

This is precisely what Dr. Benjamin Graham has given us.

You might wonder who Benjamin Graham is. He’s the man who taught Warren Buffet.The second richest man in the world (after Microsoft’s bill gates) who earned a lot his wealth from stock markets around the world.

Dr. Graham taught Buffet basic and sound principles of investment. Graham has given a very simple formula that one can use to find out the market’s expectation from a particular stock. Now if I know what type of growth rate markets expects from a particular stock and I have an exactly opposite or similar value, then I can always buy or sell that stock.


The formula is: Value = EPS (8.5 +2G), Where

V = Value of stock in Rupees (if investing in India)
EPS = Earnings per share in Rupees (if investing in India)
G = growth rate in per cent

Let’s use this formula to track the markets and share our experiences.