{"url":"https://etfiq.com/investment-committee/benjamin-graham/","section":"investment-committee","title":"Benjamin Graham's philosophy, applied to ETFs | ETFIQ","description":"Benjamin Graham on the IQ Investment Committee: 7 criteria sourced to Benjamin Graham's own book, The Intelligent Investor. 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Version 1.0, Oct 22, 2026.","url":"https://etfiq.com/investment-committee/benjamin-graham/","dateModified":"2026-10-22","isPartOf":{"@type":"WebSite","name":"ETFIQ","url":"https://etfiq.com"},"speakable":{"@type":"SpeakableSpecification","cssSelector":[".lede"]},"publisher":{"@id":"https://etfiq.com/#org"}}],"characters":37739,"truncated":false,"content":"ETFIQ / Investment Committee / Margin of Safety \n \n Version 1.0, published Oct 22, 2026: 7 criteria, 1 source, 0 of the 7 measures backed by peer-reviewed research.\n Benjamin Graham's philosophy, applied to ETFs\n In the tradition of Benjamin Graham, this seat reads 7 criteria from ETFIQ data, version 1.0 of Oct 22, 2026. Are you paying less than the holdings are worth?\n 7 Criteria \n 1 Source \n 1.0 Version \n\n Seat: Graham-style Margin of Safety.\n No investor named is affiliated with or endorses ETFIQ. Not investment advice.\n Bio\n Benjamin Graham was born in London on May 9, 1894. His family moved to New York when he was a year old. He graduated second in Columbia's class of 1914 and went straight to Wall Street, starting in the bond department of Newburger, Henderson & Loeb.\n On Jan 1, 1926, he opened the Benjamin Graham Joint Account with money from friends and his own savings. Jerome Newman joined him late that year and stayed for 30 years. Graham-Newman Corporation took over from the partnership on Jan 1, 1936. In 1928 he began 28 years of evening lectures at Columbia's business school. David Dodd sat in his first class.\n Graham and Dodd published *Security Analysis* in 1934. Graham wrote *The Intelligent Investor* in 1949 for lay readers and revised it in 1954, 1959, 1965 and 1973.\n In 1948 Graham-Newman bought half of Government Employees Insurance Company (GEICO) for $720,000, about a quarter of the fund's assets, and passed the shares on to its own holders. Graham later said that this one decision earned more than all his other investments put together.\n The fund's wider record was steadier than spectacular. A 1977 study by the Financial Analysts Research Foundation found that from Jan 31, 1945, to Aug 20, 1956, excluding GEICO's gains after its 1948 distribution, Graham-Newman earned 17.4% a year before its management fee and 15.5% after it. The S&P 500 earned 18.3% a year. The fund carried far less market risk, with a beta of 0.39.\n Graham and Newman wound up the firm in 1956. Graham moved to California and taught at UCLA. He died at his home in Aix-en-Provence, France, on Sept 21, 1976, aged 82.\n Philosophy\n Graham drew a hard line between investing and speculating. An investment, in his definition, rests on thorough analysis, protects the money put in, and aims for a return that is adequate rather than spectacular. Anything that fails those tests is speculation, whatever it is called. He first set the definition down in *Security Analysis* in 1934 and repeated it at the start of *The Intelligent Investor*.\n The idea he put above all others was the margin of safety. He opens the last chapter of *The Intelligent Investor* by naming it the central concept of investment. For a bond, the margin is the amount by which a company's past earnings exceed its interest bill. For a stock, it is the gap between the price paid and a sober estimate of what the business is worth. The margin does not need to be exact; Graham wrote that it makes an accurate estimate of the future unnecessary. It needs to be wide enough to absorb miscalculation or worse than average luck. A wide margin bought at a low price, spread across many holdings, was his answer to an unknowable future.\n He wrote for two kinds of reader. The defensive investor wants safety and freedom from bother. Graham told that reader never to hold less than 25% or more than 75% of the portfolio in stocks, with an even split as the standard, leaning toward stocks only when prices were low. The stock portion should hold 10 to about 30 large, prominent, conservatively financed companies. The enterprising investor, willing to do more work, could hunt for bargains. Graham's own firm had bought many stocks priced below their net current assets alone, with nothing paid for plant or other assets.\n His most famous image is Mr. Market, the moody partner who offers each day to buy or sell at a price that swings with his temper. Graham's point was that a quoted price is an offer, not a verdict. The investor can take it when it is foolish and ignore it otherwise.\n His thinking moved in two directions late in life. First, GEICO showed that one fine business held for decades could outweigh a career of cheap statistical bargains, and he said so. Second, he grew doubtful that detailed security analysis still paid. In a March 6, 1976, interview he said institutional funds should start from an index of 100 or 150 S&P 500 stocks, with managers paid only for any improvement on it. He added that two decades of experience suggested one could have done as well with the S&P 500 as with a great deal of work.\n Seen together, Graham's method is a discipline rather than a formula: measure value conservatively, pay well below it, diversify, and let the market's moods work for you rather than on you.\n Key works\n - *Security Analysis*, with David L. Dodd (McGraw-Hill, 1934; revised 1940, 1951, 1962). - *The Interpretation of Financial Statements*, with Spencer B. Meredith (Harper, 1937); later revised with Charles McGolrick. - \"Is American Business Worth More Dead Than Alive?\" *Forbes*, three articles, June 1 to July 1, 1932. - *Storage and Stability* (McGraw-Hill, 1937) and *World Commodities and World Currency* (McGraw-Hill, 1944). - *The Intelligent Investor* (Harper, 1949; revised 1954, 1959, 1965, 1973). The 1973 fourth revised edition is the text reprinted, with commentary by Jason Zweig, in the HarperBusiness revised edition of 2003, the edition paged in this profile. - \"The Renaissance of Value\" (Financial Analysts Research Foundation, 1974). - \"A Conversation with Benjamin Graham,\" *Financial Analysts Journal* 32(5), Sept 1976.\n What we cannot know\n Graham-Newman's year-by-year record is published only from 1945, so his results before then, and the full value of the GEICO distribution to each holder, cannot be reconstructed from primary figures.\n Source quality\n Strong. His own books, and a 1977 biography and interview transcript published by the profession's research foundation and built from his unpublished memoir draft. The fund record before 1945 is not documented.\n Sources\n Irving Kahn and Robert D. Milne, Benjamin Graham: The Father of Financial Analysis (Financial Analysts Research Foundation, Occasional Paper Number 5, 1977), p. 2: born May 9, 1894, in London; family moved to New York a year later; second in the Columbia class of 1914; first job at Newburger, Henderson & Loeb. Built from nearly 200 pages of Graham's unpublished 1956 memoir draft and a March 1976 interview. CFA Institute \n Kahn and Milne (1977), p. 12: the Benjamin Graham Joint Account began Jan 1, 1926, with $450,000; Jerome Newman joined late in 1926 and stayed 30 years until Graham retired in 1956. Same PDF.\n Kahn and Milne (1977), p. 22: Graham-Newman Corporation formed to succeed the partnership as of Jan 1, 1936. Same PDF.\n Kahn and Milne (1977), p. 19: in 1928 he began a 28-year career as a lecturer in the evening division of Columbia's School of Business; David L. Dodd enrolled in his first class. Same PDF.\n Kahn and Milne (1977), selected bibliography, pp. 49 to 50: editions of Security Analysis (1934, 1940, 1951, 1962) and The Intelligent Investor (1949, 1954, 1959, 1973); the 1937 and 1944 books (it names Charles McGolrick, not Spencer B. Meredith, as co-author of the 1937 first edition of The Interpretation of Financial Statements , which the book's own title pages contradict); the 1932 Forbes articles; \"The Renaissance of Value\" (1974); and \"A Conversation With Benjamin Graham\" (September 1976). p. 27 dates The Intelligent Investor to 1949. Same PDF.\n Kahn and Milne (1977), pp. 27 to 28: in 1948 Graham-Newman bought a half-interest in GEICO for $720,000, nearly a quarter of its assets; the shares were spun off to Graham-Newman holders; Graham summed up that the GEICO decision brought in vastly more profit than all his other investments combined. Same PDF.\n Kahn and Milne (1977), part IV, \"Benjamin Graham as a Portfolio Manager,\" pp. 43 to 45, Table 1 and Figure 1: Graham-Newman Corp. excluding GEICO, Jan 31, 1945, to Aug 20, 1956: annual rate of return 17.4%, management fee 1.9%, against 18.3% for the S&P 500; actual return 15.5% a year; beta 0.39. Same PDF.\n Kahn and Milne (1977), p. 29: the firm was liquidated in 1956; Graham moved to California that year and began as an adjunct professor of finance at UCLA. Same PDF.\n Kahn and Milne (1977), p. 1: died Sept 21, 1976, at his home in Aix-en-Provence, France, at age 82. Same PDF.\n Kahn and Milne (1977), part III, \"An Hour with Mr. Graham, March 1976\" (dated March 6, 1976, in the transcript), interview by Hartman L. Butler Jr., CFA, pp. 39 to 40, answer to \"What thoughts do you have on index funds?\" Same PDF.\n \"A Conversation with Benjamin Graham,\" Financial Analysts Journal 32(5), 20 to 23, Sept 1976, DOI 10.2469/faj.v32.n5.20. Bibliographic record from Crossref.\n Benjamin Graham, The Intelligent Investor , revised edition, updated with new commentary by Jason Zweig, preface and appendix by Warren E. Buffett (HarperBusiness, 2003). Its chapter text is Graham's 1973 fourth edition. Page numbers in these notes are from scanned copies of this edition, read Oct 21, 2026.\n The Intelligent Investor (1973 text), chapter 1, \"Investment versus Speculation: Results to Be Expected by the Intelligent Investor\": the 1934 definition of an investment operation, quoted from Security Analysis ; and the firm's purchases of bargain issues selling below their net current assets. Some later anthologies print the definition with \"satisfactory return\" in place of \"adequate return,\" so ETFIQ paraphrases it rather than quoting it.\n The Intelligent Investor (1973 text), chapter 4, \"General Portfolio Policy: The Defensive Investor\": never less than 25% or more than 75% in common stocks, an equal division as the standard, more in stocks at bargain levels and less when the market is dangerously high.\n The Intelligent Investor (1973 text), chapter 5, \"Rules for the Common-Stock Component\": a minimum of ten and a maximum of about thirty issues; each company large, prominent and conservatively financed.\n The Intelligent Investor (1973 text), chapter 8, \"The Investor and Market Fluctuations\": the Mr. Market parable and the passage on what price fluctuations mean for the true investor, p. 205 of the 2003 revised edition.\n The Intelligent Investor (1973 text), chapter 20, opening paragraph, p. 512 of the 2003 revised edition; the same chapter on the margin of safety rendering an accurate estimate of the future unnecessary and absorbing miscalculation or worse than average luck.\n Warren E. Buffett, Berkshire Hathaway 2017 letter to shareholders (dated Feb 24, 2018), p. 9, crediting \"Ben Graham's oft-quoted maxim\" on the voting and weighing machine. Berkshire Hathaway \n Benjamin Graham and Spencer B. Meredith, The Interpretation of Financial Statements : the HarperBusiness reprint titled The Classic 1937 Edition (1998) credits Graham and Meredith, and an eleventh printing of 1955 describes itself as a revision of the book by Graham and Meredith. the book at the Internet Archive \n Open Library's catalog record for The Intelligent Investor lists editions of 1949, 1954, 1959, 1965 and 1973. Open Library record \n In his words\n \u201cConfronted with a like challenge to distill the secret of sound investment into three words, we venture the motto, MARGIN OF SAFETY.\u201d\n Benjamin Graham, The Intelligent Investor, chapter 20, \"'Margin of Safety' as the Central Concept of Investment,\" opening paragraph; p. 512 of the 2003 HarperBusiness revised edition The Graham-style Margin of Safety seat\n Graham-style Margin of Safety is one seat of the IQ Investment Committee. It applies Benjamin Graham's own book, The Intelligent Investor to ETFIQ data.\n Scope\n A fund of ten holdings or more, read as one company: Graham asked the defensive investor for at least ten issues (ch. 5, p. 114). A fund with no look-through has no group to read.\n Before this seat publishes: Not published until the ETF adaptation is signed off and the nightly look-through publishes for US funds, with the share of weight that meets each test.\n Source strength: Strong: the investor\u2019s own books, letters or memos. Graham's own book. His seven tests and his outer price limit carry his own numbers; reading them on a fund as one company is how he read the Dow, and the parts of that reading he states only in words are ETFIQ's, labelled.\n Lenses apply publicly known investing principles to ETFIQ data. No investor named is affiliated with or endorses ETFIQ. Not investment advice.\n What the investor published\n In ETFIQ\u2019s words, with the source of each. Sourced to Benjamin Graham's own book, The Intelligent Investor.\n Pay well below what a business is worth, so that mistakes and bad luck still leave you whole. (Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 20, p. 512) \n The defensive investor owns ten to about thirty large, prominent, conservatively financed companies. (Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 5, p. 114) \n Set an outer limit on price: 25 times average earnings of the past seven years, and 20 times the last twelve months'. (Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 5, rule 4, p. 115) \n Seven tests for each company: size, financial condition, earnings stability, dividend record, earnings growth, and a moderate price against earnings and against assets. (Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, pp. 348-349) \n He read the seven tests on the Dow as a whole at the end of 1970, which met them all, two of them only just. (Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 350) \n Sources\n The published work each criterion is sourced to Source What the seat takes from it Edition Link \n Benjamin Graham, The Intelligent Investor The defensive investor's four rules for the stock portfolio, among them at least ten issues and an outer limit on price (ch. 5, pp. 114-115); the seven tests of size, financial condition, earnings stability, dividend record, earnings growth and price (ch. 14, pp. 348-349) and their reading on the Dow Jones Industrial Average as a group at the end of 1970 (ch. 14, p. 350); the margin of safety (ch. 20) HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003 source \n\n Research behind the measures\n Peer-reviewed research on how each measure is taken. It never adds a criterion, and where it weakens one the criterion says so.\n Henry R. Oppenheimer (1984), A Test of Ben Graham's Stock Selection Criteria , Financial Analysts Journal 40(5), 68-74 ( doi:10.2469/faj.v40.n5.68 ). NYSE and AMEX stocks screened on Graham's criteria from 1974 to 1981, with an earnings yield at least twice the AAA bond yield and debt below book value, beat the market index by a wide margin after adjusting for risk and size.\n Dwi Kartikasari (2016), A Test of Graham's and Lynch's Stock Screening Criteria on Shares Traded on the Indonesian Stock Exchange (IDX) , Journal of Indonesian Economy and Business 31(1), 22-38 ( doi:10.22146/jieb.10318 ). Portfolios that had to pass Graham's criteria in full held too few stocks to be diversified and did not beat the market consistently after risk; Lynch's combined criteria did better.\n Henry R. Oppenheimer (1986), Ben Graham's Net Current Asset Values: A Performance Update , Financial Analysts Journal 42(6), 40-47 ( doi:10.2469/faj.v42.n6.40 ). Stocks priced below their net current asset value beat market benchmarks from 1970 to 1983 on mean and risk-adjusted returns, and the cheapest against net current assets beat them by the most.\n Joseph D. Vu (1988), An Empirical Analysis of Ben Graham's Net Current Asset Value Rule , Financial Review 23(2), 215-225 ( doi:10.1111/j.1540-6288.1988.tb00787.x ). Stocks priced below their net current asset value still earned abnormal returns in the 1970s and early 1980s, and later mergers do not explain the gain.\n Ying Xiao and Glen Arnold (2008), Testing Benjamin Graham's Net Current Asset Value Strategy in London , The Journal of Investing 17(4), 11-19 ( doi:10.3905/joi.2008.17.4.011 ). On the London Stock Exchange from 1981 to 2005, stocks with net current assets well above their market value earned market-adjusted returns that size and the usual risk factors do not explain.\n Joseph D. Piotroski (2000), Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers , Journal of Accounting Research 38, 1-41 ( doi:10.2307/2672906 ). Among stocks cheap against book value, a simple score of nine accounting signals separates the financially strong from the weak, and favouring the strong raised returns materially: quality tests applied inside a cheap set work.\n Definitions and method\n Each criterion reads one ETFIQ measure against two thresholds. The seven tests are read on the fund as one company, and the state follows Graham, who asked for all seven: a price test beyond its band Challenges; a price test that cannot be read leaves the seat Not enough data; a test read and failed, or a price within its band, makes it Mixed, since no reading of the rest could change that; a test that applies still unread then leaves it Not enough data; all that apply met Supports. Financial condition does not apply to a fund half or more in financial companies, which Graham sets no such test.\n The weights. The state does not weigh the tests. A price test beyond its band Challenges, and a price test that cannot be read leaves the seat Not enough data; any other test read and failed makes it Mixed, since Graham asked for all seven; it Supports only on all seven met. The weights, 20% for each price test and 12% for each of the other five, order funds within a state only.\n Price against three years' earnings (ETFIQ\u2019s measure) Is the fund, read as one company, priced at a moderate multiple of its earnings? Measure: the group's P/E on three years' earnings. The fund's holdings read as one company, as Graham read the Dow: earnings, book value, current assets and liabilities and debt summed on the share of each company the fund's dollar owns. The group's price over its average earnings of the last three fiscal years. Null where under 70% of the fund's weight is measured, or where the group's three years' earnings are not positive. Supports where the group's P/E on three years' earnings at or below 15x and the group's three years' earnings positive equal to true. Challenges where (the group's P/E on three years' earnings above 15x or the group's three years' earnings positive equal to false) and (the group's P/E on seven years' earnings above 25x or the group's seven years' earnings positive equal to false or the group's P/E on twelve months' earnings above 20x or the group's twelve months' earnings positive equal to false). Mixed between. Threshold: the investor\u2019s own figure (Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 349; Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 5, rule 4, p. 115). Both lines are Graham's own, each written for one company; reading them on the fund as one company is ETFIQ's, as for all seven tests. The seat Supports only at 15 times average earnings of the last three years or less (ch. 14). Above it, the group reads Mixed while it stays within his outer limit for the defensive investor, 25 times average earnings of the last seven years and 20 times the last twelve months' (ch. 5), and Challenges beyond either. Within the limit is never a pass, and where either outer figure is unread a group above 15 is Not enough data. Printed with: the group's P/E on seven years' earnings: The fund's holdings read as one company, as Graham read the Dow: earnings summed on the share of each company the fund's dollar owns. The group's price over its average earnings of the last seven fiscal years. Null where under 70% of the fund's weight is measured, or where the group's seven years' earnings are not positive.; the group's P/E on twelve months' earnings: The fund's holdings read as one company, as Graham read the Dow: earnings summed on the share of each company the fund's dollar owns. The group's price over its earnings of the last twelve months. Null where under 70% of the fund's weight is measured, or where the group's earnings over the twelve months are not positive. Weight: 20%; required; a Challenge here makes the seat Challenge. Sourced to: Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 349; Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 5, rule 4, p. 115. Research, context, not a test of the measure: Henry R. Oppenheimer (1984), A Test of Ben Graham's Stock Selection Criteria , Financial Analysts Journal 40(5), 68-74. Tests the earnings-yield and debt screen from Graham's last interviews, not the seven defensive tests. Research, weakens the measure: Dwi Kartikasari (2016), A Test of Graham's and Lynch's Stock Screening Criteria on Shares Traded on the Indonesian Stock Exchange (IDX) , Journal of Indonesian Economy and Business 31(1), 22-38. The one study of the defensive tests themselves: held strictly, they leave almost nothing to own. Price against book value (ETFIQ\u2019s measure) Is the fund, read as one company, priced at a moderate multiple of its book value? Measure: the group's P/B. The fund's holdings read as one company, as Graham read the Dow: earnings, book value, current assets and liabilities and debt summed on the share of each company the fund's dollar owns. The group's price over its book value. Null where under 70% of the fund's weight is measured. Supports where the group's P/B at or below 1.5x or (the group's P/E times P/B read equal to true and the group's P/E times P/B at or below 22.5x). Challenges where the group's P/B above 1.575x and (the group's P/E times P/B read equal to false or the group's P/E times P/B above 23.625x). Mixed between. Threshold: Supports: the investor\u2019s own figure (Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 349); Challenges: ETFIQ\u2019s reading. Graham's line is 1.5 times book value, or a P/E times P/B of 22.5, and the seat Supports only within it. The product is the group's own P/E times its own P/B. Graham gave no looser line, so the band is ETFIQ's and narrow: 5% of each line, for the months between the book value filed and the price. Beyond both bands the seat Challenges. Printed with: the group's P/E times P/B: The fund's holdings read as one company, as Graham read the Dow: earnings, book value, current assets and liabilities and debt summed on the share of each company the fund's dollar owns. The group's P/E on three years' earnings times its P/B. Null where either is null. Weight: 20%; required; a Challenge here makes the seat Challenge. Sourced to: Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 349. Research, context, not a test of the measure: Henry R. Oppenheimer (1986), Ben Graham's Net Current Asset Values: A Performance Update , Financial Analysts Journal 42(6), 40-47. Tests net current asset value, not this test. Research, context, not a test of the measure: Joseph D. Vu (1988), An Empirical Analysis of Ben Graham's Net Current Asset Value Rule , Financial Review 23(2), 215-225. Tests net current asset value, not this test. Research, context, not a test of the measure: Ying Xiao and Glen Arnold (2008), Testing Benjamin Graham's Net Current Asset Value Strategy in London , The Journal of Investing 17(4), 11-19. Tests net current asset value, not this test. Adequate size (ETFIQ\u2019s measure) Are the companies large enough to have weathered bad years? Measure: adequate size. Whether the fund's weighted median holding has annual sales of at least $750 million (Graham's $100 million of 1972, raised by CPI-U: ETFIQ's conversion). Null where under 70% of the weight is measured. Supports where adequate size equal to true. Challenges where adequate size equal to false. Threshold: ETFIQ\u2019s figure, because the investor published none. Graham's $100 million of annual sales in 1972 is $750 million in 2024 dollars by the CPI-U, ETFIQ's conversion; reading it on the weighted median holding is ETFIQ's reading of a test he states company by company. Weight: 12%. Sourced to: Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 348. Research: none cited; the criterion rests on the source alone. Strong financial condition (ETFIQ\u2019s measure) Do the companies, taken together, carry more short-term assets than short-term debts, and little long-term debt? Measure: financial condition. The fund's holdings read as one company, as Graham read the Dow: earnings, book value, current assets and liabilities and debt summed on the share of each company the fund's dollar owns. Whether the group's industrial companies have current assets at least twice their current liabilities and long-term debt within net current assets, and its utilities debt within twice their equity. Financial companies are left out, as Graham sets them no such test. Null where under 70% of the rest of the weight is measured. Supports where financial condition equal to true. Challenges where financial condition equal to false. Threshold: ETFIQ\u2019s figure, because the investor published none. Graham's company lines are his: current assets at least twice current liabilities and long-term debt within net current assets for an industrial company, debt within twice equity for a utility. Reading them as a number on the group is ETFIQ's, where he judged the Dow's condition adequate in the aggregate in words (p. 350). Financial companies are left out, as he sets them no such test, the soundness he calls more relevant there being assured, he writes, by regulation and supervision (pp. 360-361), and where they carry half the fund's weight or more the test does not apply to the fund at all (ETFIQ's line): the other tests decide. Weight: 12%. Applies to: the share in financial companies below 50%. Sourced to: Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 348; Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 360. Research, context, not a test of the measure: Joseph D. Piotroski (2000), Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers , Journal of Accounting Research 38, 1-41. Tests the F-score, not this test. Earnings stability (ETFIQ\u2019s measure) Did the companies, taken together, earn a profit in every one of the last ten years? Measure: ten years of earnings. The fund's holdings read as one company, as Graham read the Dow: earnings, book value, current assets and liabilities and debt summed on the share of each company the fund's dollar owns. Whether the group's earnings were positive in each of its last ten fiscal years. Null where under 70% of the weight is measured. Supports where ten years of earnings equal to true. Challenges where ten years of earnings equal to false. Threshold: the investor\u2019s own figure (Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 348). Some earnings in each of the past ten years, Graham's own, read on the group's earnings. Weight: 12%. Sourced to: Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 348. Research: none cited; the criterion rests on the source alone. Dividend record (ETFIQ\u2019s measure) Have the companies paid a dividend every year for twenty years? Measure: twenty years of dividends. True where companies with a dividend in each of the last 20 years carry half the fund's weight or more; false where companies with a year without one do; null otherwise, since a record that simply ends is neither. Supports where twenty years of dividends equal to true. Challenges where twenty years of dividends equal to false. Threshold: ETFIQ\u2019s figure, because the investor published none. Uninterrupted dividends for at least 20 years is Graham's line for a company. Reading it on the fund as the share of weight with twenty years against the share with a year without one, half the weight deciding, is ETFIQ's; a record that simply ends is neither. Weight: 12%. Sourced to: Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 348. Research: none cited; the criterion rests on the source alone. Earnings growth (ETFIQ\u2019s measure) Did the companies, taken together, grow their earnings by a third over ten years? Measure: earnings up a third in ten years. The fund's holdings read as one company, as Graham read the Dow: earnings, book value, current assets and liabilities and debt summed on the share of each company the fund's dollar owns. Whether the group's three-year average earnings per share, on today's shares, rose by at least a third over ten years. Null where under 70% of the weight is measured. Supports where earnings up a third in ten years equal to true. Challenges where earnings up a third in ten years equal to false. Threshold: the investor\u2019s own figure (Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 348). Earnings per share up by at least a third over ten years, on three-year averages at each end, Graham's own, read on the group. Weight: 12%. Sourced to: Benjamin Graham, The Intelligent Investor (HarperBusiness, revised edition, updated with new commentary by Jason Zweig, 2003; its chapter text is Graham's 1973 fourth revised edition, and pages are cited from it, 2003), ch. 14, p. 348. Research: none cited; the criterion rests on the source alone. Compare and model modes\n In compare mode funds are ordered by the seat\u2019s score, and ties break on the group's P/E on three years' earnings, lowest first.\n In model mode: In each sleeve, the fund with the lowest group price against three years' earnings, among funds that meet the most of the seven tests.\n How the seat is tested\n The cases this seat must pass before it ships, with the result each must give.\n A group that meets all seven : Supports. Priced at 12 times three years' earnings and 1.2 times book, large, sound, profitable every year, paying dividends for twenty and growing: the Dow at the end of 1970 as Graham read it.\n A bank fund above his 15, within his outer limit, its dividends unread : Mixed (Price against three years' earnings: Mixed, Price against book value: Mixed, Strong financial condition: does not apply). 18 times three years' earnings is above Graham's 15, but within his outer limit for the defensive investor, 25 times seven years' and 20 times twelve months'; 1.55 times book sits within the narrow band for measurement. Mixed, never a pass, and nothing the dividend record could show would change it. The fund is nearly all banks, which Graham sets no financial-condition test, so that test does not apply.\n A bank fund that meets every test that applies : Supports (Strong financial condition: does not apply). Priced at 12 times three years' earnings and 1.1 times book, large, profitable every year, paying dividends for twenty and growing. Graham sets banks no financial-condition test, so the six tests that apply decide, and all six are met.\n Beyond his outer limit : Challenges (Price against three years' earnings: Challenges). 30 times three years' earnings, and beyond both of Graham's outer limits: no margin of safety in the price.\n Cheap, with a weak balance sheet : Mixed (Strong financial condition: Challenges). Both price tests met, but the companies together carry too little working capital: Graham asked for all seven.\n Above 15, its seven years' earnings unread : Not enough data. Above Graham's 15, and with seven years' earnings unread it cannot be told whether it sits within his outer limit: a band never turns an unread figure into a reading.\n A group with no earnings to price : Challenges (Price against three years' earnings: Challenges). The group's earnings over three and seven years are not positive, so it has no P/E at all: no margin of safety.\n A fund of nine holdings : does not apply. Under the ten issues Graham asked the defensive investor to own, so not read as a group.\n RPV : any result but Supports. The S&P 500's cheapest stocks by its Pure Value rules. 54% of its weight can be priced on three years' earnings here, under the 70% the group reading needs, so it reads Not enough data rather than a guess. Figures read on Oct 22, 2026.\n AVUV : any result but Supports. Small-cap value, 698 companies. 5% of its weight can be priced on three years' earnings here, far under the 70% the group reading needs, so it reads Not enough data; whatever its prices would show, it is not read as passing. Figures read on Oct 22, 2026.\n VUG : Challenges. The textbook fail: large-cap growth, priced far above earnings and book.\n ARKK : any result but Supports. Many holdings with thin or no earnings, and too few of them read (62% of its weight on three years' earnings, 45% on seven) for the group to be priced: no margin of safety can be shown, and the seat says so rather than guessing. Figures read on Oct 22, 2026.\n What this cannot tell you\n The intrinsic value Graham's margin is measured from: the seven tests stand in for it.\n A utility on his own size line ($50 million of total assets): a utility is read on sales.\n Holdings without SEC filings, and foreign companies, are not measured, and the share measured is printed.\n Whether to own the fund. The seat applies published principles to data and gives no advice.\n Changes to this seat\n Version 1.0, Oct 22, 2026: First version: the seven tests on the fund read as one company; above his 15 times earnings, Graham's own outer limit reads Mixed, and a narrow band for measurement on price to book.\n How to check any of this\n This seat\u2019s criteria, thresholds, weights and cases are in the committee file , the same file the committee reads.\n Where to next\n The Investment Committee Low Cost Quality Growth at a Reasonable Price Global Contrarian All-Weather Cycles & Risk Macro & Liquidity Diversification Disruptive Innovation Trend Following The Skeptic Every method \n Cite this page. ETFIQ, Benjamin Graham's philosophy, applied to ETFs, data as of Oct 22, 2026. https://etfiq.com/investment-committee/benjamin-graham/ Free to use with attribution for figures ETFIQ computes; issuer data stays under its owner's terms. The underlying files are at Open data .\n Other forms Plain ETFIQ, Benjamin Graham's philosophy, applied to ETFs, data as of Oct 22, 2026. https://etfiq.com/investment-committee/benjamin-graham/ APA ETFIQ. (Oct 22, 2026). Benjamin Graham's philosophy, applied to ETFs. Retrieved from https://etfiq.com/investment-committee/benjamin-graham/ Markdown [Benjamin Graham's philosophy, applied to ETFs (ETFIQ, Oct 22, 2026)](https://etfiq.com/investment-committee/benjamin-graham/)","source":"ETFIQ, independent ETF data. Recomputed nightly from public filings and prices.","publisher":{"@id":"https://etfiq.com/#org","name":"ETFIQ","url":"https://etfiq.com"},"license":"https://etfiq.com/license/","license_text":"Figures ETFIQ computes are free to use with attribution: ETFIQ (etfiq.com). Issuer data stays under its owner's terms.","citation":"ETFIQ, Benjamin Graham's philosophy, applied to ETFs, data as of Oct 22, 2026. https://etfiq.com/investment-committee/benjamin-graham/"}