How Much Will The Market Return? Just Count Graham Net-Nets

This may be an inappropriate question to ask at a time when the S&P500 is ruling near all-time highs.

Yet, it is always better to keep first principles in mind, and the Graham Net Net Number (NNNs) is a good way to answer the question from a binary viewpoint: is the market cheap…or not?

Definition

A white paper titled ‘Net-Net Number: Implications & Conclusions’ by Theodor Tonca, Chairman & CEO, Graham Theodor & Co Ltd, dated August 1, 2013, defines this number as follows:

The term “NetNet” coined by the late, great Benjamin Graham, refers to a typical, operating business in which the market in a stroke of genius has decided to price below the...