This article is authored by MOI Global instructor Massimo Fuggetta, founder, chairman, and chief investment officer of Bayes Investments, based in London.

Security analysis cannot presume to lay down general rules as to the “proper value” of any given common stock. Practically speaking, there is no such thing.

I hadn’t yet read Ben Graham when, many years ago, I began working as a portfolio manager for a large global asset management company. Their investment process was heavily reliant on the input of security analysts. Each of them followed a number of companies in a certain sector. Their task was to calculate the “proper value” of each stock and condense it into a Dividend Discount Rate.

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