Graham's Guidelines for Ordinary Longterm Investor

Below are some simple guidelines from the Father of Value investing Benjamin Grham on portfolio and selecting a stock to buy. This is mainly to an investor who has limited knowledge on stocks and willing to have a longterm investment. The only requirement to practice these guidelines are, 'common sense'.

Once if you cound found a company, then it required some research to match the required areas of this companies to Graham's following guidelines:

1. There should be adequite but not excessive diversification of stocks in portfolio (Minimum 10 and Maximum of 30)

2. Each company selected should be large prominant and coservatively financed.

3. Each company should have a long record of divident payment.

4. The investor should impose a limit on P/E ratio. The portfolio should be subjected to a periodice inspection.

A strong minded approach to investment, firmly based on the margin-of-safety principle can yield handsome rewards.