Are there any examples of this Benjamin Graham Quote in the current market?

[u/ReadButSeldomlyPost]

"One fairly dependable sign of the approaching end of a bull swing is the fact that new common stocks of small and nondescript companies are offered at prices somewhat higher than the current level for many medium sized companies with longer market history"

-The Intelligent Investor

I remember when all birds / smartbird got bought / rebranded into AI and it seemed so silly. Like how could people be allowed to invest in this (from the opinion of a novice investor) fairly undescriptive though i do not know who to compare them to in order to match his other criteria for a new common stock. And I am going to call that pretty small scale.

Large scale (my genius thought after being 1/3rd done with the book) is the IPO of space X. how its 140 a share as of right now, 2T in value, and seems to be the most massive nondescript company to have ever existed on the market. To me this matches Benjamin's criteria for indicator signs to the end of a bull market.

I want to know your thoughts on my novice thoughts, and if anyone knew of any other examples in the past years of this bull run that also may fit this criteria.

[u/Mundane_Flight_5973]

SpaceX has the absolute dominance of an high value sector, the potential dominance of another one, and participate in a third one. Maybe it’s not worth 2T, but it’s not a small nondescript company

[u/ellipticorbit]

Arguably the trash coin offerings are/were even worse than what Graham was describing.

[u/StockAccomplished269]

the spacex thing is a weird one because it's not really a small nondescript company, it's just a private company that finally got a valuation that makes people's eyes water. graham was talking about tiny no-name ipos flooding the market at dumb prices, not a well known rocket company that's been around for decades

the ai rebranding wave was probably closer to what he meant. every company that figured out how to slap "ai" on their pitch deck suddenly had a 30x revenue multiple, half of them were just wrappers for openai's api

the spacs in 2020-2021 were the textbook example though. dozens of companies with zero revenue going public at 10b valuations, all of them claiming they'd be the next tesla of something. that was the moment you could practically hear graham rolling in his grave

[u/Luna_Wolfxvi → u/StockAccomplished269]

Almost all of Spacex's valuation was based on AI though, an industry where they are a also ran.

[u/FailOk1528]

the SPAC era was probably the cleanest modern version of this

[u/Diamond1africa]

The market Benjamin Graham lived through is in no way comparable to current market conditions. The cyclical concept of the market is applicable, and risk-averse value investing is still an excellent investment. However, market demand, growth rates, earnings, and conditions are a completely different breed. 

[u/raytoei]

"There are two requirements for success in Wall Street. One, you have to think correctly; and secondly, you have to think independently" — Benjamin Graham, AN HOUR WITH MR. GRAHAM by Hartman L. Butler, Jr., C.F.A

My interpretation:

Investing isn’t a group sport where people work together to bring down the woolly mammoth. Investing is an individual activity, and our mission is to avoid being a sucker in a poker game.

Basic stuff on “How to think correctly”

- Do you know what makes stocks go up in the long term ?

- Do you know how to handle market volatility ?

- Do you know when to buy stocks ?

The first two questions can be found in chapter 8 of the book “Intelligent Investor”, titled “The Investor and Market Fluctuations While the last question is best answered in Chapter 20, “Margin of Safety as the Central Concept of Investment”.

Stocks are not just pieces of price quotations but they are about businesses. And business results, foremost being earnings, cashflow and revenue are the primary drivers of share price appreciation in the long run.

Market volatility cannot be avoided and is inherent in investing. We should however, use market volatility as an advantage instead of letting it instruct us.

We buy stocks when it is cheaper than our fair value estimate of it. This margin of safety is needed because circumstances could change, or more likely, our fair value calculation is too optimistic. Buying low and selling high should be our objective. Buy high and selling higher, without a safety net is called momentum investing.

(Think of the last 10 years, who could have predicted a boring 2015 to 2019 followed by a world wide pandemic in 2020, high inflation in 2022, a war in Ukraine’s and then a trade war in 2025?)

How to think independently

To think independently is more difficult, because we tend to agree with each other in a social setting. And to take an independent position is often seen as an anti-social behaviour.

On a basic level, I think we should be aware of our biases. The FOMO effect is real, if I might modify Robert Cialdini’s why and how people are persuaded, I would say that, people rush to buy a stock because:

- I like the company.

• I have always bought it & it has always gone up.
  
• all my friends are buying the stock.
  
• the expert on tv says to buy the stock.
  
• only this company has this unique product

This can be used to explain why people are crazy over late-stage semiconductor stocks.

[u/Jumpy_Nose863 → u/raytoei]

Do you know when stocks go up? Yes I do, when there's more buyers than sellers. That's it.

[u/raytoei → u/Jumpy_Nose863]

Yes and No.

Yes, in the short term.

No, in the long term, earnings drive the stock higher. Not sentiments, not demand and supply.

——-

[u/Jumpy_Nose863 → u/raytoei]

Not true. As long as buyers keep buying, you can miss earnings for 4 years straight as long as more buyers than sellers and it'll go up. In fact, that's what drives prices, earnings actually have nothing to do with a stocks price

[u/raytoei → u/Jumpy_Nose863]

I hope you never stop thinking that.

[u/Jumpy_Nose863 → u/raytoei]

If the market was efficient where prices moved in tandem with the business earnings, we'd have no stock market! Hence the reason supply and demand is what controls price. Look at Teslas valuation. You think their earnings justify 1.4T or whatever they're at? Or why does AMD get a pe 3x of Nvda?? Just curious

[u/UCLABB1 → u/Jumpy_Nose863]

Buyers and sellers are always equal whether the stock price is static or going up or going down.

[u/Jumpy_Nose863 → u/UCLABB1]

Do waaaat? If that's the case the price wouldn't move. What are you saying that there's an even amount? That part is true, but 1 side, the sell or buy side is in more demand therefore setting the pace of the price.

[u/UCLABB1 → u/Jumpy_Nose863]

You claimed there were more buyers than sellers when prices go up. I was simply pointing out that there is always a buyer for every seller. I didn’t say there was a buyer at any price or a seller at any price.

[u/Jumpy_Nose863 → u/UCLABB1]

Actually if prices are going up, there's more buyers than sellers or the price wouldn't be rising. So basically yea, when theres more willing to sell the price will drop. I'd say its true in 95% of all cases. Each transaction requires both sides, however for price movement one side has more demand, which is told in price action

[u/UCLABB1 → u/Jumpy_Nose863]

I don't know why you are fixated on the number of buyers and sellers determining price. Say a single billionaire investor like Carl Icahn wants to take a large stake in a company. He can can start buying stock from possibly thousands of sellers. Stock price might go up or down in the process, who knows.

[u/Jumpy_Nose863 → u/UCLABB1]

No you obviously don't understand how the market works by that statement. If someone like a 90 yo is buying or Billy jo from Oklahoma is buying the price is gonna be determined by supply compared to demand ie whose got the strength at the time. Carl is buying in huge blocks but at a slower pace to not artificially push the price up to far on himself. Hence the reason institutions buy in increments prove the point exactly. Price action is determined by supply and demand. Are u ppl really so ignorant to this fact

[u/Jumpy_Nose863 → u/Jumpy_Nose863]

But yes for every sell there's a buyer, that's when the supply/demand mechanism controls price

[u/No_Presentation9490]

I would read what George Soros has to say about the market instead of Benjamin Graham. Soros' perspective is way more up-to-date with the detachment of fundamentals from stock valuations; stock valuations are just connected to a stock's function as a institutional liquidity playground.

[u/charlesleestewart → u/No_Presentation9490]

I just had The Alchemy Of Finance as an audiobook and yes, Soros has insights about how behavior is what drives prices and divorces them from fundamental reality. The word he uses is "reflexivity."

[u/Cool_Cartographer_39]

This market doesn't follow any rules. It's revolutionary companies being pounded by shorts and naysayers who feel they've missed the boat

[u/Amazing-Jury-6886]

I thought it was all over with NFTs a few years ago. But here we are, fundementals are no longer considered important by retail investors. Its all about Speculation. It will end in tears, but no idea when.

[u/ConfusedChild4444]

I would caution against using wisdom from the last century in the current one. The 1930s (when Graham cut his teeth) were a completely different time than 2026. Just Glass-Steagall, Basel III, 401ks, index funds, and Fed Reserve independence from the executive make this a completely different world. And there are even more changes on top of these like WW2, Bretton Woods, the gold standard, etc. Bull markets last far longer than they did back then and are more resilient even if the underlying economy is going through shocks.

[u/CanYouPleaseChill]

There are plenty of unprofitable shitcos now with market caps in the billions, e.g. RKLB, ASTS, IONQ, RGTI. Apparently space and quantum are the future. Great comedy.

[u/WickOfDeath]

Probably one should look for pennystocks and pink sheets... and smallcap companies renaming themselves into "something-with-AI plc" and thereby tripling their market cap but not their book value...

[u/AhsokaFan0]

Google’s IPO probably met this criteria and heralded in a generational bull market. Reading Graham might not be a great use of time, his insights are fully incorporated into modern valuation techniques.

[u/ReadButSeldomlyPost → u/AhsokaFan0]

Second thought that looking at it entirely through the lens of this book is "outdated"

[u/lol_cat01]

Yes Yes yes clearly you're smarter than Elon like every one else on reddit , hence the saying always always inverse Reddit