Security Analysis: The Classic 1951 Edition

I like the ideas and methods shown here for the fundamental analysis of stock investment. It helps a lot in analyzing and buying value stocks. It will be be perfect if Benjamin Graham teaches how to sell too.

Why read this edition? Buffett worked closely under graham and he read the 1940 second edition. However he worked for Graham in 1950 and one year afterwords this edition comes out. This edition makes clear that the 1940 edition was a series of chapters and essays on various topics while this one is able to combine them all into a complete technique. Glad this edition can still be found in print. Despite Buffett recommending the second edition, I think this one might actually be the better way to go.

If you understand accounting and financial statements, this book will truly show you the path. Along with the great Graham’s other books(intelligent investor etc) you will reap the sweet monetary benefits of solid investment philosophy and the importance of analyzing a business throughly with sound principles. HIGHLY RECOMMEND! This book has conspicuously changed my life!

I have read this book twice now - one time is certainly not sufficient to absorb all of its wisdom - ten times probably would not suffice. There are some people who question whether this book is still relevant because it was published over half a century ago. I doubt they ever took the time to read it, or if they read it, I doubt that they really thought about it.The book's central point is that an investment should be made based upon a thorough investigation of the investment's merits - not on the market generally, or interest rates, etc. It does not promise an easy path to riches - the techniques take work. However, Graham and Dodd's theory of focusing on safety of principal plus satisfactory return has been time-tested, and no one can question the success that Graham's disciples such as Warren Buffett have enjoyed.A few interesting points: the book is not limited to equity investments. As Security Analysis highlights, equity investments and debt investments are similar insofar as both lay claim to the underlying assets of a company (they are different in the priority they have if the company does not make money).The book also contains an excellent section on analyzing financial statements. Many of the accounting concerns that this book raised in 1951 occured during the Internet bubble (such as the effect of stock options on a company's value and the use of write-offs to manage earnings). So much for the book being dated!Even though the book does spend some time analyzing utilities and railroads, the underlying approach used there does have some relevance to other companies.Although many people simply associate Benjamin Graham with low p/e ratio investing, Security Analysis discusses various means to review and understand an entire company. Thus, although p/e ratio is one factor Security Analysis considers, it is far from the only one.The book also contains a great discussion of how dividends may affect a company's value (largely based, it appears, on the work of John Burr Williams, author of "The Theory of Investment Value"), as well as an insightful overview of stockholder/management issues.If I have any criticisms of this book, it is that it pre-dates the use of cash flow statements and that the writing is at times a bit slow-going. That being said, the book itself is invaluable, and I can definitely trace its effects upon any number of other works, all of which become more relevant when read in conjunction with Security Analysis. Examples include:David Dreman - "Contrarian Investing: the Next Generation"Martin Whitman - "The Aggressive Conservative Investor"Mary Buffett - "Buffettology"Rappaport, Mauboussin - "Expectations Investing: Reading Stock Prices for Better Returns"Although these books may use different approaches than Security Analysis, it is obvious that the methods set forth therein stem, at least in part, from the theories set forth in Security Analysis.Given that this book can be heavy, it might be useful to read Chris Browne's "Little Book of Value Investing" or Graham's "Intelligent Investor" first. In many respects, those books are really less intensive versions of Security Analysis. However, ultimately, Security Analysis is a more useful work because of its in-depth nature.

I just received the book and was already reading the sixth edition mostly on audio. I can't speak to the edition differences yet, but I wanted to write this as a counter to one other review I saw. The print quality is good on my copy of the Classic 1951 edition.

I have read the 2nd 1940 edition of this book, and it gave me a much better understanding about stocks and bonds securities. It takes time to read the whole book, but it gives its reader valuable knowledge. I like Ben Graham's books. Although I won't have time to read this 3rd 1951 edition for the foreseeable future, I just buy it as a collectible.

Mr. Graham should have been a law professor because that is exactly how his book reads. His main determination of value takes about 30 chapters to develop and in the end it is nothing more than an average P/E ratio, over the past 10 years, used as a multiplier to determine future profitability. Aside from that, his formula definitions are vague; as is alot of the text.Don't get me wrong, the man is brilliant, but as per his writing style he is very vague, assumes a lot, and will leave most of you thinking what was that?

Want to get started investing the right way, start with the basics and build a foundation. Started investing as of Jan '08, it's now March '08 and I gotta tell you, there's no rush in investing by skimming thru this book. Sit down, relax and educate yourself. It's a good start and it's the right start. I'll keep you all posted on my investment progress. Aloha!