Testing Benjamin Graham’s net current asset value model

Abstract

The objective of this paper is to empirically test one of Graham’s investment methods based on the net current asset value (NCAV). The NCAV is truly unique, and conservative, and commonly known as the net-net method.  The ratio of the net current asset value to market value (NCAV/MV) was employed in this study to test a stock’s performance comparing to the performance of SP (b) investing in the growth period and avoiding the downturn period leads investors to earn much higher returns from the firms with a high NCAV/MV ratio; and (c) The NCAV/MV strategy requires a longer holding period of the portfolio in order to generate excess returns.