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Author: woodstove Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1933  
Subject: Introductory Date: 5/14/2000 5:18 PM
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Recommendations: 10
Hello!

The Motley Fool has very generously set up this board as a place where we can discuss the book "Security Analysis", by Benjamin Graham and David Dodd. Everyone is welcome.

I've started re-reading the first edition and it is as thought-provoking as ever. I hope that this board will be a place where those of us who are interested in, even inspired by, Graham and Dodd's work can ask questions, share answers and ideas, and explore topics related to the book. I'm hoping to get some of my questions answered, at least!

I think of this board as a coffee shop, where we are relaxing away from our investing workbenches. The topics we discuss here are likely not so much about whether a particular stock/bond is a good buy for our personal portfolio, as an attempt to understand the nature of a security or a class of securities, and to improve our skills in analysis and determining security values and suitability as an investment. After a break at the coffee shop we can go back to our investment workbenches refreshed, full of vim.

In addition to the boards for particular companies and industries boards, there are many other boards which discuss stock valuation methods. The ones I know of which might be relevant to Graham and Dodd's book are:

Bonds and Fixed Income Investments -
http://boards.fool.com/Messages.asp?id=1030062000000000

Boring Stocks -
http://boards.fool.com/Messages.asp?id=1030002000000000

Value Investing -
http://boards.fool.com/Messages.asp?id=1030029000000000

The Weighing Machine -
http://boards.fool.com/Messages.asp?id=1380692000000000

Net Net Working Capital -
http://boards.fool.com/Messages.asp?id=1380347000000000
A experiment, by Mycroft et al, following up Ben Graham's suggested strategy of investing in stocks trading below their net net working capital.

Mechanical Investing -
http://boards.fool.com/Messages.asp?id=1030013000000000
An immense board examining various mechanical systems.


Editions of Security Analysis:

As far as I know, there are two editions of Security Analysis in print, the first and fifth editions.

The first edition, 1934, has been reprinted by Mcgraw-Hill and is ISBN 0-07-024496-0. To keep the editions straight if using page references, let's call it SA1.

The first edition is the one I recommend if you do not already own a copy of Security Analysis. SA1 presents most of the concepts which show up in later editions and has a wealth of detail, examples of particular securities. SA1 is an excellent person-to-person book in my opinion; Graham and Dodd are writing for another intelligent adult, an accurate description of the typical Motley Fool participant. SA1 is not outdated. In fact it is surprising how many financial structures and accounting devices of the 1920s and 1930s have reappeared today.

I have not seen the second and third editions, SA2 (1940?) and SA3 (1951?). From SA2/SA3 material cited in SA4, it appears that each edition was a major rewrite, not just a reissue.

The fourth edition, published about 1962 I believe (got it via the library and no longer have it here to check), is the last one which Ben Graham produced. SA4 is also an excellent book, but out of print. I felt it was a bit more textbooky than SA1, and in places was cut into convenient sections of roughly lecture-length. The Ben Graham personality comes though a bit more clearly in SA4, and it is a pleasure to read. I cannot recall the co-authors, but believe Sidney Cottle was one.

Perhaps someone who has SA2, SA3, or SA4 can post some additional information.

The fifth edition was not by Graham and Dodd. Its full title is "Graham and Dodd's Security Analysis", by Sidney Cottle, Roger Murray, Frank Block and Martin Leibowitz, McGraw-Hill, 1988, ISBN 0-07-013235-6. In my opinion, SA5 is a good book but not excellent, and is a major departure from the SA1-to-SA4 trajectory. There is too little detailing of examples, and sometimes rather than explain a topic reference is made to other authorities. SA5 is not suitable for self-study I believe, but requires a course surrounding it and providing additional material if one is to learn security analysis.

You can see I am strongly biased towards using SA1, or any of SA1 through SA4, as the worthy guide to personal study. Best I say that up front. Others likely differ.

This board, like all Motley Fool boards, is a free for all. Here is another analogy: we are sitting around a campfire. Every so often one of us will throw a topic on the fire, and we will all gain warmth and illumination. I hesitate to carry this analogy any further, lest it remind someone of a bonfire of vanities or elicit flames!

Thanks again to the Motley Fool for a place to chat, and let's to it!

Woodstove
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