Scores of investors often regard Benjamin Graham as the grandfather of value investing. Even those who shun Graham’s methods of analyzing securities tend to revere quotes attributed to him. For example, on market complacency, “… chief losses to investors come from the purchase of low-quality securities at times of good business conditions.”

In this discussion, we can assume that business conditions are relatively good. After all, over the last five years, corporations have refinanced their debts, boosted profit margins, strengthened their balanced sheets, increased productivity and avoided the costs associated with wage inflation. With respect to the quality of securities, investors have been mesmerized by stocks with high price-to-book and high price-to-earnings ratios, particularly shares of the companies that PowerShares NASDAQ Internet (PNQI) tracks.

Not surprisingly to value-oriented investors, then, PNQI has fallen on rough times. The exchange-traded fund is roughly 15% off its all-time highs. That said, dip buyers may not be ready to throw in the ticker tape. PNQI has escaped bear market territory by rallying 6.5% off its May lows.

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