|
 |
| |
|
| |
| |
| “Security Analysis” was originally written by Warren Buffett’s teacher, Professor Benjamin Graham of Columbia University along with David Dodd. When “Security Analysis” was written in the 1930’s, the investment world was entirely different than it is today, with very few world class intellects being part of the investment profession. “Security Analysis” did not initially take the world by storm as some were led to believe. The basis of the book which is value investing was not held in particularly high esteem, although it certainly has caught on since the book’s publication. |
| |
|
| |
| |
| |
| Although the book has been published and revised since 1940, we have just recently seen a new revised edition published in September of 2008. The principal writers involved in the remake are Seth Klarman who is the author of Margin of Safety, James Grant the founder of Grant’s Interest Rate observer, and Bruce Greenwald, who is a professor of finance at Columbia University. There are at least six other highly respected investment professionals who participated in the rewrite of Benjamin Graham’s “Security Analysis”. |
| |
|
| |
| |
| This is what you need to know about Graham & Dodd’s “Security Analysis”: |
| |
- The new edition is an abridged edition based on the 1940 edition which was the second edition.
- Ten chapters were deleted from the latest edition of “Security Analysis”.
- To compensate for the missing chapters a CD has been added which contains the entire, yes I said entire 1934 edition, as well as the original notes.
- The book still comes in at 700 plus pages.
- Do not read “Security Analysis” like it is a novel. You need to take ownership of this book, and you do that by underlining, writing in the margins, and taking a yellow highlighter and making the book yours.
- You read this book because you need to understand balance sheets, and income statements, and if you study it, you will do just that. Warren Buffett has admitted that he has read this book from cover to cover more than four times. If the sage of Omaha can do that, what’s your excuse?
- Yes, some of the information is showing its age. The first edition was finished and published in 1934. There is still no excuse for not owning it, and studying it.
- Keep in mind that “Security Analysis” deals with industrial companies. Service oriented companies were such a small representation in the economy back then, that they were never included.
- You will learn about the difference between investment and speculation, and rational markets and irrational markets.
- Graham and Dodd’s book does not cover cash flow statements, which in my opinion has become the most important of the three financial statements. You can show a huge net income, and have no cash in the bank to pay your bills with.
- We would also recommend that you read Ben Graham’s “The Intelligent Investor” as a prelude to this book, or alongside it.
- Life and investments are different today than they were back in the 1930’s. There are no longer any such things as permanent investments. You have to watch your portfolio, and make changes from time to time.
- Yes, concepts like market timing, intrinsic value, and business valuation are still useful, but you have to know whether you should be an investor in the industry you are looking at or not. Don’t miss the big picture, by wrapping yourself too tightly in the small nuances of an investment.
|
| |
| |
| In closing, you cannot be a serious investor, and not have read Graham & Dodd’s “Security Analysis”. You should also take a look at Philip Fisher’s “Common Stocks and Uncommon Profits”, and study George Soros’ “Soros on Soros – Staying Ahead of the Curve”. |
| |
|
|
| |
| Get Our Email Updates |
|
|
| |
| For Other Book Reviews Visit Our Home Page |
|
|
|
|
 |
|
|
