Quality didn't make a good investment on its own, however. Graham specifically sought out quality at a good price. To evaluate a stock's price, he looked at the price-to-earnings (P/E) and price-to-book-value (P/B) ratios.
Offering different strategies for different types of investors, Graham believed that investors short on experience or time should stick to high-quality, established stocks, while more experienced investors should focus on large, financially strong companies that pay dividends and come at a reasonable price.
Career highlights
Achieving early success at Newburger, Henderson & Loeb, Graham was soon made a partner in 1920. But prior to his promotion, Graham demonstrated an enthusiasm for sharing his investing wisdom and insights through writing.
During World War I, Graham submitted an article entitled "Bargains in Bonds" to the Magazine of Wall Street (now known as The Wall Street Journal). The publication appreciated his perspective, and Graham continued to provide frequent contributions to the magazine. Later, Graham authored several books:
- The Intelligent Investor Rev Ed: The Definitive Book on Value Investing, by Benjamin Graham and Jason Zweig
- Security Analysis: Sixth Edition, Foreword by Warren Buffett, by Benjamin Graham and David Dodd
- The Interpretation of Financial Statements, by Benjamin Graham and Spencer B. Meredith
Graham-Newman Corporation remained in business until the 1950s, recovering from the losses incurred during the Great Depression and generating sizable returns for its clients. The company's star investment was a 50% interest in Geico Insurance, purchased in 1948 for about $736,000 -- the same Geico that is today wholly owned by Buffett's Berkshire Hathaway (BRK.A -0.72%) (BRK.B 0.03%).