SECURITY ANALYSIS by Benjamin Graham and David Dodd
Author: Mr Graham is considered the father of value investing. He thought at Columbia Business School. David Dodd Was a colleague of Graham’s at Columbia, where he was an assistant professor of finance.
Book: This book is considered the (technical) bible of Value Investing. First published in 1934, Graham & Dodd explain in depth the different types of investment securities, their characteristics, advantages, and disadvantages, to allow small and large investors to operate on a solid and reliable basis, away from irrational decisions. It is divided into 8 main parts: The approach to investing, fixed value investments, senior securities with speculative features, theory of common stock investments, income statement analysis, balance sheet analysis, discrepancies between price and value, and global value investing. With 723 pages, there are too many takeaways to explain here, ranging from the difference between investment and speculation to the way to analyse earnings trends. However, most of them are now shared in all the innumerable new books, podcasts, videos, etc. about the topic.
Opinion: As I said before, this book is considered the technical bible of value investing and many people claim that it’s the best book they have read about investing (I am not sure if they have really read it). My first point: DON’T BUY THE SIXTH EDITION. The publisher has added 200 pages of additional considerations by contemporary investors (which is ok, but I bought Graham’s book, not theirs). And they have passed to a DVD some of the original chapters (quite annoying). Second point: There are too many considerations about fixed income, preferred stock, so on. Until page 323 there is nothing about common stocks. Third point: If you want to learn how to value a business, I recommend you either McKinsey’s Valuation book or anything by Damodaran. Those books could be more useful for you nowadays. Overall, I think it’s a good book (Parts IV, V, VI & VII especially) but it’s too heavy/boring and there are better resources about there. CURITY ANALYSIS by Benjamin Graham and David Dodd
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