What if I told you that one of the most reliable ways to make money in stocks has nothing to do with predicting the future, analyzing trends, or following the news? It sounds strange, but it’s true. The strategy I’m talking about is buying companies for less than the value of their own assets — specifically, their current assets. Benjamin Graham, the man who taught Warren Buffett how to invest, called this the “net-net” approach. And while most investors have never heard of it, the ones who have used it consistently have made serious money.

Let me break it down simply. Imagine a company has $10 million in cash, receivables, and inventory sitting on its books. Now subtract every single debt that company owes — short-term loans, long-term debt, everything. If what’s left is still more than what the entire company costs to buy in the stock market, you’ve found what’s called a Net Current Asset Value (NCAV) stock. You’re essentially buying a dollar for fifty cents.

“The stock investor is neither right nor wrong because others agreed or disagreed with him; he is right because his facts and analysis are right.” — Benjamin Graham

So why doesn’t everyone do this? That’s the right question to ask.

The honest answer is that most investors find these stocks boring, ugly, or scary. These aren’t Tesla or Apple. These are small, often obscure companies in dull industries that nobody is writing about on financial news websites. They’re ignored. That’s exactly why they get cheap enough to qualify.

The first thing you need to do is learn the formula. Take a company’s total current assets — cash, money owed to them by customers, and inventory. Then subtract every liability the company has, not just short-term ones but also long-term debt and preferred stock. Divide that number by the total shares outstanding. That gives you the NCAV per share. If the stock is trading below that number, it’s on your radar.

But here’s where most beginners make their first mistake. They find a stock trading at 95% of NCAV and think they’ve found a bargain. They haven’t. A 5% discount is not protection — it’s just noise. You want to buy at no more than 67% of NCAV. That means the stock has to be trading at a 33% discount or more before you even consider it seriously. Graham himself used this threshold, and it exists for a good reason. Things go wrong. Assets get written down. The world surprises you. You need a wide cushion.

“Price is what you pay. Value is what you get.” — Warren Buffett

Think of it like buying a used car. If a car is worth $10,000 but the seller is asking $9,500, you’re not getting a deal — you have almost no room if something breaks. But if that same car is priced at $6,500, you can absorb the cost of repairs and still come out ahead. That’s your margin of safety.

Now, not all current assets are created equal. This is something most people skip over, and it costs them. Cash sitting in a bank account is worth exactly what it says. But inventory? That depends entirely on what kind of inventory it is. A company that makes fashion clothing might have a warehouse full of last season’s styles. That inventory might be worth far less than what’s written on the balance sheet. A retailer with food products near expiry, or a tech company with components that are already outdated — these are traps.

Receivables — money that customers owe the company — also need scrutiny. If a company is owed money by customers who haven’t paid in six months, that’s a red flag. Adjust your NCAV calculation downward when the current assets look shaky. Be conservative. Your goal is to figure out what a liquidator — someone selling everything off quickly — could realistically collect within a year.

Here’s a lesser-known fact that surprises most people: some of the richest NCAV opportunities have historically appeared in Japan. During the 1990s and 2000s, Japanese markets were full of small companies trading at massive discounts to their net current assets. Investors who were paying attention — and had the patience to wait — generated returns that domestic Japanese investors were completely missing because they were conditioned to distrust their own market after the bubble burst.

“In the short run, the market is a voting machine. In the long run, it is a weighing machine.” — Benjamin Graham

This brings up the question of why these discounts exist at all. If a company is worth more dead than alive, shouldn’t the market price that in immediately? In theory, yes. In practice, markets are inefficient at the small end. Analysts don’t cover micro-cap stocks. Institutional funds can’t buy them — the positions would be too small to matter. Retail investors are chasing hype. So these little pockets of value sit there, unnoticed, sometimes for years.

The good news is that the discount almost always closes eventually. It closes because the company gets acquired. Or management buys back shares. Or the business improves and earnings start rolling in. Or an activist investor steps in. Or the market simply wakes up. The reason doesn’t matter that much. What matters is that history shows these discounts do close, and when they do, the patient investor collects the gap.

Now let me tell you what to do when you’ve found a candidate. Don’t buy it all at once. Screen for it, put it on a watchlist, and start reading their quarterly filings. Current assets change. A company burning through cash every quarter is not the same as one that is holding steady or improving. You want to see stability or improvement in the asset base. A stock that qualifies as a net-net today but will lose half its cash in six months is not the safe bet it looks like.

Also look at what the company actually does. You’re not betting on a turnaround, but you’re not hoping for a slow death either. The best NCAV stocks are companies that are temporarily out of favor — maybe their industry hit a rough patch, maybe they had one bad year, maybe they just got forgotten. They’re not structurally broken. Their assets are real and liquid, and the business, while not exciting, isn’t destroying value rapidly.

Consider building a basket of these stocks rather than concentrating in one or two. Graham himself recommended owning at least 20 to 30 net-net stocks at a time. The logic is simple: each individual company carries some risk of things going wrong, but across a diversified group, the math works strongly in your favor. You don’t need every pick to work out. You just need the basket to perform, and historically, it has.

“The individual investor should act consistently as an investor and not as a speculator.” — Benjamin Graham

A real-world example illustrates this well. During a recent recessionary period, a small regional manufacturer of industrial components saw its stock price collapse. The business was boring, the press ignored it, and most investors assumed the worst. But someone doing the math noticed: the company had significant cash, no debt, and inventory that was genuinely useful. The stock traded at roughly 55% of NCAV. Three years later, the stock had tripled. The business didn’t transform into something amazing — it just kept operating steadily while the market eventually caught up to the math.

When should you sell? Sell when the discount closes. Once the stock trades near or above NCAV, your margin of safety is gone, and you’re now just holding a mediocre business at a fair price. That’s not the game you’re playing. Take the gain, move on, and find the next one.

What makes this strategy genuinely special is its simplicity. You don’t need to forecast earnings five years out. You don’t need to understand complex financial instruments. You don’t need to predict what interest rates will do. You just need to count assets, subtract liabilities, and buy when the price is below that number with a significant discount. If the assets are real, the downside is protected by arithmetic.

The irony is that this is one of the oldest and most documented strategies in investing, and yet most people walk right past it in search of something more exciting. Graham wrote about it in the 1930s. It was the foundation of Buffett’s early career before he shifted to buying quality businesses at fair prices. And it still works today, precisely because it always looks unattractive when the opportunity is biggest.

If you’re willing to look where others aren’t — small, boring, ignored companies with more cash than their entire market value — the numbers will do the work for you.