Security Analysis: The Classic 1940 Edition [Hardcover]

If you have read The Intelligent Investor, and want a text that will expand and delve deeper into fundamental analysis, this book is for you. The separation between this book, and books similar in content, is the fact that Graham shows examples of his applied techniques. The book is broken down into two main sections, fixed value investments(bonds, preferred stocks, ect.) and common stock analysis/selection. He takes you step by step through income statement and balance sheet analysis. Graham is wary of coporate reports, especially when it comes to earnings, and points out coporate trickery to watch out for and avoid. The topics are detailed, and the exaples extensively researched. Overall, Security Analysis is a mixture of art and scienece that lays a timeless foundation for financial analysis.

For those interested in learning and understanding valuing investing in an indepth technical way, this book is for you. Its depth and breadth of coverage is very impressive. Graham puts forth all arguments on investing techniques and then shows, through detailed worked examples, why value investing provides the most consistent and obtainable above average results.

Be warned though, this book is not for the faint hearted. It can become quite complex at times, and a reasonable level of knowledge within finance and accouting would be most beneficial to anyone reading this book. I would also recommend that readers buy Graham's other book, The Intelligent Investor, first before reading this, as it provides an excellent foundation for tackling the value investing techniques found in this book.

This first half of the book focuses on bond and preffered issues. This section is dry and tedious at times, but the groundwork it lays as a point of departure for studying common stocks means it really is necessary to read. But it's well worth it, the last half of the book or so is devoted to common stock investment and here is where Graham shows his true genius and value investing becomes a clear and logical process.

It's well worth your time and your money.

I know not who will read this, but perhaps I can act as a MENTOR to you, and we will never meet. In all of life there are short cuts that can shave years of trial, error, and pain, that others who do not learn the shortcuts must pay the price. Each generation has to learn what the previous generation has learned. Sometime they don't, and the results are clearly evident in the histories that we read, and take for granted.

No one argues that the greatest investor of the 20th century is Warren Buffett. He has an Einstein type brain lodged inside his skull. You couple this enormous intellect with a laser-like focus and discipline, and you still don't have the world's greatest investor. What Buffet needed was the skill sets, a template that he could fall back on to face every conceivable business analysis, in any type of economic environment.

Remember it was Buffett in the height of the bull market in the late 1960's that cashed in the investment partnership he ran, and sent back the money to every investor along with a letter. During the height of the bull craze absolutely equivalent to the Internet craze we all went through a few years ago, Buffett had this to say. When the game that is played is no longer the game I understand, it's time to leave the game. He did, and saved a fortune in the bear market that ensued - the worst bear market since the Great Depression.

How did Warren Buffett do it? It was simple. There's an expression that Isaac Newton arguably the greatest intellect of the last five hundred years use to tell people. It's called OTSOG; it means On The Shoulders of Giants. Newton was implying that if he had seen more than others, if he knew more than others; it is by standing ON THE SHOULDERS OF GIANTS. He meant Euclid, and the earlier Greeks, and all the knowledge they had accumulated.

Warren Buffett would tell you himself that he has stood on the shoulders of giants. His giant was Benjamin Graham. Even Buffet's towering intellect, laser like focus, and hardwired brain for compounding, would not have been enough to insure financial success without Benjamin Graham as his mentor. Today, you and I have the same opportunity as Buffett.

Although we can never sit in the same classroom as Buffett did at Columbia University so many decades ago, while the master Benjamin Graham lectured at the front of the room, you and I can read his masterpiece, which Buffett has called the BIBLE OF INVESTING.

Buffett is one of the two, or three richest men in the world. He still fly's on a privately owned $50 million Gulf stream jet, and reads the 1940 edition of Graham and Dodd's Security Analysis. The same book you have the opportunity to buy, and own for your very own today. I have heard him say, that he has read it from cover to cover more than a dozen times. He has read the other editions as well. This edition is the treasure, because it is still in the voice of Benjamin Graham himself, and it is the second edition, after Graham worked out the kinks that were in the first edition published in 1934 during the Great Depression.

Who will Benefit from this book?

If you are involved with the market, perhaps a student interested in the market, or run billions of dollars, which I have done in my lifetime, anybody will benefit from this book. Is it easy to read - of course not? Will you understand everything you read - Not a chance? It really doesn't matter. You will take out of it what you need to take out of it, and each time you open it, you will take out more.

It may take months and years for Graham to teach you the lessons you need to learn, but he will teach you, just as he taught Buffett. Remember Buffett wasn't his only successful student. There were many other MASTERS that were created in that classroom at Columbia so many decades ago. An example are the folks that ran and run Sequoia Capital, a value hunting firm that's been around for decades, outperforming all their competitors.

There is really no other book that can give you the FORMAL GROUNDING that you need to become a true player in the stock market. Even now, forty years after I started reading Graham and Dodd, I am still learning something on every page I read over and over again.

Many other reviewers have taken the time to explain what it on those pages; I will not rehash them here. I need to motivate you to ACT, to click the button that says, I want to own this book, so please allow me to share one or two stories with you.

When I was a teenager going to college in New York, my accounting professor got me an afternoon job with John W. Bristol, the foremost money manager of the 1950's and 60's. He ran the Princeton University portfolio among many others of equal prestige. Always sitting behind him was a well-worn copy of Graham and Dodd.

Two years later with Arthur Andersen, I had the honor of auditing the richest man in the world - Daniel K. Ludwig. He was worth $5 billion in the early 1970's. No education, 5th grade maybe, and forget college. Behind him was Graham and Dodd, the only book there, and it was underlined and annotated. This man was secretive and shy; he had only two friends in life - Howard Hughes, and Clark Gable.

I implore you, READ THIS BOOK and CHANGE YOUR LIFE.

Richard Stoyeck
StocksAtBottom.com