Calculate the maximum fair price for a stock using Benjamin Graham's formula from The Intelligent Investor. Enter any stock's financial data and instantly see its Graham Number and margin of safety.
Benjamin Graham, Warren Buffett's mentor and the father of value investing, created this formula to determine the maximum price a defensive investor should pay for a stock.
The constant 22.5 comes from Graham's criteria that a stock's P/E should not exceed 15 and its P/B should not exceed 1.5 (15 × 1.5 = 22.5). If the current stock price is below the Graham Number, the stock may be undervalued — the difference represents your margin of safety.
Graham taught that a margin of safety of 30% or more provides adequate protection against analytical errors and market downturns. This principle remains the cornerstone of LIUV's AI-driven analysis methodology.