The stock market that Benjamin Graham saw in the 1940’s was a much different place than the markets we see today. Some of the buildings might be the same, but the companies and the people who invest in them have changed plenty. Securities tend to trade at a much higher premium today than at any other time - possibly caused by the increase interest in investing from the middle class, a product of 401(k) retirement plans and more information about how to invest, often provided by the literature of Benjamin Graham himself.

Applying the tradition Graham rules for investing, finding a stock that fits the mold can be hard, if not impossible, in modern markets. While it’s easy to find a dividend-paying large cap company, it gets much harder when we start applying criteria like a low debt to assets ratio and high growth over the past decade (Graham required 33% over 10 years).

Investing like Graham today requires us to modify the rules to what we suspect Graham would have wanted, given the changes in the stock markets over the past 60 years. Instead of require 1/3rd growth over 10 years, instead look for 1% growth over each of the last 5 years. A P/E ratio of 15 might have once scared away Graham, but in modern times that’s fairly low. The often overlooked price-to-book ratio is rarely going to be under 1, which was the number that made Graham students like Warren Buffett salivate, but you can still find companies with a healthy price-to-book under 2.

Despite some very changed markets, it’s still possible to successfully invest with the same philosophies that made Graham disciples like Buffett very rich men.