Security Analysis: The Classic 1940 Edition Hardcover – Large Print, 16 December 2002
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- Language : English
- Hardcover : 880 pages
- ISBN-10 : 007141228X
- ISBN-13 : 978-0071412285
- Best Sellers Rank: 16,879 in Books (See Top 100 in Books)
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From the Back Cover
The Long-Awaited Reprint of Graham and Dodd's Masterful First Revision
The first edition of Security Analysis, published in 1934, forever changed the theory and practice of successful investing. Yet the remainder of that tumultuous decade brought unprecedented upheaval to the financial world, compelling Benjamin Graham and David Dodd to produce a comprehensively revised second edition.
It is that edition, out of print for decades, that you now hold in your hands. Security Analysis, Second Edition, published in 1940, is considered by many (including legendary Graham student Warren Buffett) to be vastly superior to the first. Yet after three subsequent editions and over six decades, the insightful and instructive second edition could be found only in rare bookshops and closely-guarded private collections.
McGraw-Hill, the book's original publisher, is honored to publish Security Analysis: The Classic 1940 Edition. Identical in every meaningful aspect to the classic original, this is the long-awaited book that set the tone for decades of value investors. Let it provide you with a greater understanding of this country's financial heritage, along with timeless value investing insights that have proven relevant and profitable in all types of markets and financial environments--and will never go out of style.
"The lapse of six years since first publication of this work supplies the excuse, if not the necessity, for the present comprehensive revision ... We have revised our text with a number of objectives in view. There are weaknesses to be corrected and some new judgments to be substituted."--From the Preface
The names Graham and Dodd have come to be inextricably linked in the minds of thoughtful, disciplined investors. Their 1934 book Security Analysis made the two synonymous with intelligent, long-term investing, and forever changed the face of Wall Street. While post-Crash traders and investors treasured the book for its rigorous honesty, determined logic, and unequalled track record of success, the authors saw only the "weaknesses to be corrected."
The second edition of Security Analysis, published in 1940, allowed Ben Graham and David Dodd to set the record straight. It was considered by many then, and is considered by many now--including Graham student and disciple Warren Buffett, to be superior in many ways to the first. Still, as subsequent revised editions appeared, the once-indispensable second edition fell out of print and became virtually impossible to locate.
With Security Analysis: The Classic 1940 Edition, McGraw-Hill returns this long-sought investment classic to the marketplace. While its timeless advice--that investors should ignore social trends, company prospects, and management styles to focus on the balance sheet--is as vital today as it was in 1940, it is the book's updated insights and observations that justify its importance in the annals of both investing and publishing.
Even as the financial world sang the praises of 1934's groundbreaking Security Analysis, Benjamin Graham and David Dodd knew they could improve it. And that they did, with the 1940 publication of a brilliant second edition. Now, after having been unavailable for decades, this influential book returns in Security Analysis: The Classic 1940 Edition. As powerful today as it was for investors six decades back, it will reacquaint you with the foundations of value investing--more relevant than ever in tumultuous 21st century markets--and allow you to own the only book that could rightfully claim to have improved upon the eloquent first edition of Security Analysis.
About the Author
David L. Dodd was a colleague of Grahams at Columbia University, where he was an assistant professor of finance.
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As others have written, one challenge with reading this book is the different environment in which it was written. Due to advances in data availability (i.e. Efficient Market hypothesis), there are reduced opportunities for material arbitrage and significant undervaluations. Furthermore, the extensive use of Railroad examples adds another layer of depth to the work, as a fair bit of contextualization is necessary at times. Hence, prior knowledge with The Intelligent Investor and a functional understanding of the capital markets is certainly beneficial when reading this work, although one with adequate financial literacy could likely track with the arguments and examples regardless.
Lastly, the print of the book was fine, and I would definitely recommend this edition (as opposed to others with content edits) to anyone interested in expanding their knowledge of the capital markets and increasing their ability to synthesize accounting and financial theories in performance of security analysis.
For those of you reading this who are new to investing, Benjamin Graham and David Dodd quite literally wrote the book on value investing, and this is it. I would point out though that it was written for the purpose of being a source of information and tools rather than a way of introducing and inspiring its readers to the philosophy of value investing. So if you are new to investing or to the concepts of value investing, I would really recommend reading Graham's "The Intelligent Investor" first; it's a comparatively easy to read introduction to the concepts covered in greater detail in this book.
While I have not read the original 1930's edition, I have heard that this version is more complete in that it irons out some of the kinks in the investment strategy that Graham developed following his near bankruptcy during the great depression.
A word on the relevance of this book in today's market: Much of the book centers about examples from preferred stocks of utilities and railroads, investment vehicles which are far less prevalent today than they were in the early 20th century. However, these are just examples, and the pitfalls and opportunities which arise in the stock market are as prevalent today as they were in the days this book was written. I am of the opinion that those who criticize this work on the basis that it is outdated, really did not understand what Graham was trying to do; to convey a new way of thinking about stocks, and to understand them based on the company that they represent. It doesn't matter whether you are purchasing a pre-depression era railroad preferred or the hybrid floating rate bond of a modern technology company, the examples exist to illustrate how to look past all that and to understand what the purchase of that security really means. If, after reading this book, you find yourself unable to transfer the examples to the modern world, then quite frankly you've read it wrong.
If, however, you are concerned about the relevance and are after more specific guidance on modern applications (as well as trimming of the "less" relevant sections), take a look at the 6th edition of this book, which contains detailed chapter summaries and introductions by modern money people.
Finally, the reason for the 4 stars: The digitization of this book is not fantastic, and given the price this is not really acceptable. I found several errors which I have reported (and will hopefully have been fixed by now), but my real gripe is with the tables and figures, which are simply scanned. This is usually fine, but many of the footnotes are so small as to be illegible, and the overall feel is somewhat like a sketchbook; with cutouts glued to the pages where the tables were in the real book. I had hoped that Amazon would instead have digitally transcribed the tables and inserted them, or at least given them a transparent background, rather than the sepia tone that can't be changed on the tables. If this is ever corrected I'll change my review to 5 stars and remove this paragraph.
I can't possibly express my gratitude for what those two did when they decided to put Graham's experience onto paper in the form of this book, and I think I will forever be grateful for their efforts. This book has taught me invaluable lessons not only in investing but also in prudence and the value of sobriety in the face of euphoria and gloom, lessons which apply to many other facets of life.
Only quibble is that it's a bit long and sometimes ponderous. If you haven't read "The Intelligent Investor" by Benjamin Graham, get that one first; but after you read that, you'll probably want to read this one.
However, it's very helpful to have a background in finance and accounting to enjoy this book. I tried to read it as a college sophomore, but couldn't get through it. After 1.5 years of investment banking, and 1 year of investment analysis (constant reading of company filings), I gave this book another try. I completed it and learned a lot. It's very comprehensive in its discussion of corporate finance, investment securities, and investment philosophy.
I created my own tumblr detailing the insightful quotes:[...]
It's a book that I will re-read again in the near future.