Graham’s Value Investing Principles in NEPSE Context

In the Nepal Stock Exchange (NEPSE), where market sentiment, rumors, and short-term trading often dominate, understanding and applying Benjamin Graham’s Value Investing Principles can transform an ordinary trader into a disciplined long-term investor. Known as the “Father of Value Investing”, Benjamin Graham’s philosophy emphasizes buying stocks below their intrinsic value, maintaining a margin of safety, and thinking like a business owner rather than a speculator. These timeless ideas — first developed in the 1930s — remain just as powerful today, even in Nepal’s developing stock market.

At the heart of Graham’s philosophy lies the concept of Intrinsic Value, the true worth of a company based on earnings, assets, and future cash flows — not on market hype or daily price swings. According to Graham, “Price is what you pay; value is what you get.” When a company’s market price is significantly lower than its intrinsic value, it presents a margin of safety — a cushion that protects investors from errors in judgment, market volatility, or unexpected downturns.

In NEPSE, applying this principle means identifying undervalued companies with strong fundamentals but temporarily weak market sentiment. For example, banks or hydropower companies trading below book value due to short-term policy impacts may still hold excellent long-term potential. Graham also recommended focusing on financial stability, low debt levels, and consistent earnings history before investing. Rather than chasing trends or short-term profits, investors should aim for steady, compounding growth through disciplined selection and patience.

Another key principle is the separation between the investor and the speculator. Speculators react emotionally to market swings, while true investors — guided by valuation — remain rational and patient. Graham personified market volatility as “Mr. Market”, a moody business partner who offers prices every day — sometimes too high, sometimes too low. The wise investor doesn’t follow Mr. Market’s emotions; instead, they take advantage of his mistakes by buying undervalued assets and selling them when they reach fair value.

For Nepali investors, especially in sectors like banking, insurance, hydropower, and manufacturing, Graham’s methods provide a solid foundation for long-term wealth building. Value investing helps them avoid speculative bubbles and focus on fundamentally strong companies that generate consistent returns over years.

According to Sandeep Kumar Chaudhary, Nepal’s leading Technical and Fundamental Analyst and founder of the NepseTrading Training Institute, “Graham taught that the market is not your enemy — it’s your teacher. Learn to wait, buy when others panic, and value will reward you.” With 15+ years of banking and market experience and having trained over 10,000 investors, he teaches how to apply Graham’s ideas to NEPSE through financial ratio analysis, intrinsic value calculations, and patient investing strategies.