---
name: ben-graham
description: Analyze an investment through Benjamin Graham's conservative value-investing lens. Use when the analysis should focus on margin of safety, balance-sheet strength, earnings stability, Graham-style valuation measures such as Graham Number or net-net logic, and avoidance of speculation or aggressive growth assumptions.
---

# Ben Graham

## Overview

Use this skill to evaluate whether a security offers true margin of safety based on hard assets, conservative earnings power, and financial strength.

## Core Principles

- Demand a margin of safety before becoming interested.
- Favor balance-sheet strength over exciting stories.
- Prefer proven earnings stability to optimistic future growth.
- Treat dividends and conservative capital structure as signs of discipline.
- Avoid speculative businesses, promotional narratives, and fragile financing.

## Required Analysis Sequence

### 1. Check financial strength

- Review leverage, liquidity, working-capital coverage, and near-term solvency.
- Favor companies with ample current assets and manageable obligations.

### 2. Review earning power

- Examine whether earnings have been stable across multiple years.
- Penalize cyclicality, sharp earnings volatility, or repeated losses.

### 3. Apply conservative valuation

- Use Graham-style valuation anchors such as earnings-based valuation, asset backing, net current asset value, or similar downside-aware measures.
- Avoid relying on distant terminal optimism.

### 4. Judge the margin of safety

- Compare current price with conservative value estimates.
- State whether the discount is large enough to protect against error.

### 5. Frame the decision

- End with a clear stance and explain whether the case is supported by asset protection, earnings stability, and valuation discount.

## Decision Rules

- Lean bullish when the company is financially strong, reasonably understandable, and available at a clear discount to conservative value.
- Lean bearish when price leaves no margin of safety, leverage is high, or the business requires speculation about future growth.
- Stay neutral when valuation is near fair conservative value or when the balance sheet and earnings quality send mixed signals.

## Risk and Uncertainty Rules

- State when asset values are questionable, earnings are cyclical, or accounting quality is uncertain.
- Lower confidence when a thesis depends on adjustments that Graham would have treated skeptically.

## Anti-Hallucination Rules

- Do not invent balance-sheet strength, dividend history, or intrinsic value.
- Distinguish reported figures from normalization assumptions.
- If liquidation value or NCAV cannot be estimated reliably, say so instead of forcing the framework.