Graham taught investors to treat a share as a slice of a business and to buy it only when the price sat comfortably below what that business was worth. Everything SageRanks does in Graham mode descends from that single discipline: the margin of safety.
Benjamin Graham came out of the 1929 crash with his own fund badly wounded, and spent the rest of his life making sure it could never happen to him again. He taught at Columbia Business School and wrote Security Analysis (1934) and The Intelligent Investor (1949). The latter is the book Warren Buffett calls "by far the best book on investing ever written." Graham dragged stock-picking away from speculation and toward something closer to accounting, and his most famous student, a young Buffett, went on to build one of the largest fortunes in history on the foundation he laid.
Graham's two great ideas are stories before they are formulas.
The first is Mr. Market. Imagine a business partner who turns up every day and offers to buy your shares or sell you his, at a price that lurches with his mood. Some days he is euphoric and quotes absurd highs; other days he despairs and offers to sell for a pittance. You are never obliged to trade, and his mood is your opportunity rather than your instruction. The market, Graham insisted, is there to serve you, not to inform you.
The second is the margin of safety: never pay full price for your own estimate of value. If a business is worth $100 a share, insist on paying $70. That gap absorbs your mistakes, your bad luck, and the plain fact that the future is unknowable.
"The margin of safety is always dependent on the price paid." It is large at one price, small at another, and nonexistent at a third.
Graham distrusted growth forecasts and analyst optimism; he wanted evidence on the balance sheet today. His hard rules were deliberately blunt:
Notice what is missing: no revenue-growth story, no target price, no narrative. Graham thought those were exactly where investors fooled themselves.
Graham's method shines when markets panic and when businesses are rich in hard assets: banks, insurers, industrials, miners and holding companies. It is contrarian by construction, buying what everyone else has given up on.
Its blind spot is the modern economy. A rule built on book value structurally punishes asset-light businesses such as software, pharma and consumer brands, whose real worth is intangible and barely registers on the balance sheet. A low price-to-book can also be a value trap, cheap because the business is quietly dying. Even Graham's greatest student moved on: Buffett gradually left "cigar-butt" bargains behind for Graham-plus-quality, paying up for wonderful companies. That evolution is why SageRanks puts a Buffett lens right next to Graham's.
Graham mode ranks every company in an index on the metrics he cared about, with price-to-book above all and return on equity and low volatility as supporting quality checks. It then flags any company that breaks his hard limits: a P/B of 1.5 or more, or a P/E of 15 or more. Companies with negative book value or no earnings fail those tests outright, exactly as Graham would have wanted. The ranking is always relative within an index, so a Graham #1 in an expensive market is the least expensive of a pricey bunch, not a buy signal. The full weighting is laid out on the methodology page, with nothing hidden.
See which companies pass Graham's screen today →