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I know this general topic has been brought up here before, but I hope you will indulge me on this particular wrinkle:

I have read the 1st and 3rd editions of Security Analysis. I am pretty sure I do not want to read the 5th or the 2nd editions (although someone could argue me into reading them, with enough effort). However, I am unsure about whether or not I should read the 4th edition. Does anyone who has read the 3rd edition have an opinion on this?

As you know, it is a pretty major undertaking to read any of the editions, and there are many other interesting things on my reading list. However, I don't want to miss a "don't miss" opportunity either.--Rockythecat
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Hi Rocky,

I've not read the 3rd edn, so cannot compare it to the 4th. The 4th
was my first encounter with Security Analysis, and so everything was
new and a great deal of it did not stick. However, I recall the 4th
had some good material on utility companies. Not enough to drive me
to seek out the 4th again thru inter-library loan.

If you're looking for some good reading material, for new perspectives,
you might enjoy the Walter Schloss archives at Columbia. The documents
are available at

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Because no one has posted anything new in this board (I think they don't know what they are missing) since my last thread, I thought I would take this opportunity to make a followup. Since I am often behind in my reading, particularly on these discussion boards, I often feel my comments would be too late or too out of place for most of what I read. Since no one has posted anything new here for the past 3 months, perhaps this will not be too out of place.

First, I would like to thank Woodstove (I thanked him privately months ago) for his excellent post giving us the link to the Graham materials. What a gold mine!

As a result of reading these articles, I decided to read the 4th edition of Security Analysis. Although my understanding is that Graham was less involved in this edition than the previous ones, from reading background materials, including Graham's autobiography, I discovered that Graham was still very actively involved in the production of the 4th edition.

I would recommend the 4th edition to anyone wanting to read the book. I understand that Morningstar recommends the 5th edition, which was produced after Graham's death. I am not yet convinced I should make the time investment to read that edition, though.--Rockythecat
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Thanks RockyCat, for your post and for your kind words too.

I'm sure nothing (well, very little) related to investing is out of
place. My view of this discussion stated in post #2 - sort of like
sitting around a campfire, and every so often someone speaks up.

I guess you bought your 4th edn used? I know the 3rd has been re-issued
but have not even got to the point of buying that yet.

Right now, on my reading table, is Charles Brandes "Value Investing
Today". I like the book. It is introductory, something that might
be given to a friend who was interested. And sometimes the way a
particular point is covered suggests a perspective that goes beyond
introductory, so I think any value investor might gain from Brandes'

My opinion of the 5th edn you know. Perhaps it was disappointment
that it was no longer the voice of Ben Graham that put me off.

Turning to another topic - the Delphi chap 11 filing made me wonder
if there are presently values in auto related. I think in general
it is a bit too soon to move, but maybe not too soon to start trying
to find some candidates.

Sales of autos overseas seem robust, from anecdotal material excerpted
in Doug Noland's "Credit Bubble Bulletin", via
Each week Doug mentions inflation-suggestive news items eg Bloomberg
and there is frequently a mention of increased auto sales figures.

So, I'm wondering if a US-based auto parts company, which has patents
or other merits which give it entree to global vehicle manufacturers,
might be robust enough to be a safe investment. Perhaps if there is
a lot of Delphi-related pessimism developing, most of the parts mfgrs
may get sold down in sympathy.

No specific names in mind. Just wondering how to play the situation.

My current candidates for accululation are Alcan (which I consider to
be quite safe, and advantageously priced, though perhaps not ultimate
low which may be reached if there is a confidence break in the market),
and forest products companies - of which I'm trending into Cascades,
Domtar, Norbord, Abitibi (bit spec), and Tembec (much more spec).

And just having a ball, watching silver price go up, as entitlements
to silver are about 10 pct of my portfolio. There I'm holding some
silver certificates (as proxies for the metal, ultimately redeemable
in cash though, not really metal) and some shares of SSRI.

Last time around in the big spike in silver, April-2004, I neglected
to sell a bit. Possibly I'll try to catch the volatility this time,
sell some to maintain 5-10 pct overall, buy back later if it drops,
or if silver does not drop, have no regrets because of retained part.
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Hey Woodstove, I did buy the 4th edition used, which is fairly easy these days. At least it was for me.

I am sure your comments about auto industry stocks were for the readers at large. However, for my own part, I tend to look at stocks for the purposes of adjusting my portfolio about once a year - although that "once a year" lasts several months. Consequently, I have not looked at auto stocks for a while. When I last looked they did not appeal to me, but that was months ago. I will have to give them a closer look next time around.

I have a small precious metals stake in a mutual fund of precious metals and other metals stocks. This is mostly a hedge, but I am not discounting the possibility of a secular cycle benefiting commodities. If there is such a cycle, my guess is that it would last several more years. Then again I would have guessed that Peyton Manning would be leading the league in passing this year, so what do I know?--Rockythecat
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Hi Rocky,

A recent sign I've seen that autos might be getting interesting was an
article that Wilbur Ross was starting to buy up bankrupt parts mfgrs.
He put together International Steel from bankrupt steelmakers. Mostly
his style is buying bank debt, I think - ie the most senior securities,
not common stocks. On steel, he was active a couple of years before
the steel industry started to look appealing for common stock buying,
and of course there were external factors driving steel demand higher.
So I'll figure a couple of years at least might be an ok wait period
before getting serious.

Arbitrarily I've set car sales at 65 pct of prior peak as safe enough
trough indicator. We aren't there yet. And also, for parts companies,
I think there are a lot of cash outlay costs that've been capitalized
on the strength of having a supplier relationship with one of the big
three. One company I follow, for instance, capitalized the training
of their workforce. Many companies capitalize product development.
If sales drop by 33 pct, there should be some writedowns in fairness.
In any case, there will be implicit writedowns which eventually will
be taken into account by some analysts. Just yesterday an analyst
report on one auto company revised their estimate down from approx
book value, to 90 pct of a reduced book value after a hypothetical
writedown of the value of a division the company is trying to sell
with difficulty. In all, a 20 pct reduction in the target price
which is being recommended. I don't use brokerage target prices
but like the raw data which is presented, and the business insight
in the reports. But also, as an indication of pessimism trough,
it is meaningful that at least one analyst of one company is now
taking a proactive bearish stance. More needed before it's a crowd.

When stuff like autos or forest products goes down, it can stay down
for quite a while (maybe permanently). I think there's lots of time.
Years of opportunity, even if it's not always the same company which
is the opportunity. No reason to vary from super-cautious purchaser
mode. My biggest regrets do not come from the occasional blowouts,
but rather from having paid too much for what was available cheaper.

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Hey, Woodstove,
Perhaps you can help me figure out how to access this archive. Seems I have to have a login name and password. Bummer.

Any ideas?

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sorry to interrupt the flow but if i could not go far in getting the gist of this book or incorporating what i so far got from it into my investment analysis, can someone suggest books to start from for someone new to stock analysis.
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sorry to interrupt the flow but if i could not go far in getting the gist of this book or incorporating what i so far got from it into my investment analysis, can someone suggest books to start from for someone new to stock analysis.

Security Analysis is not perhaps the most readable book. Ben Graham's "Intelligent Investor" is considerably shorter and more readable. I think it is worth reading anyway.

I bought this version of it a few years ago:

You can ignore the commentry by Zweig if you wish (I pretty much did).

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thanks stevnFool
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