The Teachings of Benjamin Graham on Security Analysis Still Relevant Today

Did you know, first published in 1934, Security Analysis is one of the most influential financial books ever written?  Selling more than one million copies through five editions, it has provided generations of investors with the timeless value investing philosophy and techniques of Benjamin Graham and David L. Dodd.

As relevant today as when they first appeared nearly 75 years ago, the teachings of Benjamin Graham, “the father of value investing,” have withstood the test of time across a wide diversity of market conditions, countries, and asset classes.

This new sixth edition, based on the classic 1940 version, is enhanced with 200 additional pages of commentary from some of today’s leading Wall Street money managers. These masters of value investing explain why the principles and techniques of Graham and Dodd are still highly relevant even in today’s vastly different markets.

Security Analysis is a book about value investing. The first edition was written by Benjamin Graham and David Dodd in 1934 when the world was in the grips of the Great Depression. In 1940 they did a major revision. These pages tell of the best and worst times -the run-up to the 1929 peak and the crash the grind of the Great Depression. These principles and fundamentals of value investing are timeless.

The book has seven parts and before each part is an introduction to the section and current examples of the principles in the section. These introductions are from professional value investors such as Warren Buffet, the richest man in American in 2008, Howard Marks, cofounder of Oaktree Capital Management, J. Erza Merkin of Gabriel Capital Group, James Grant of Grant's Interest Rate Observer, Robert Lowenstein one of America's top financial journalists, and others.

The first edition was written in 1934, at the depth of the depression, which inspired Graham to search for a more conservative, safer way to invest. Graham agreed to teach at Columbia University with the stipulation that someone took notes. Dodd, then a young instructor at Columbia, volunteered. Those transcripts served as the basis for this book that "created" the concept of value investing. The second edition is a slight update, and considered by many to be the best.

As other reviewers have pointed out, this (sixth) edition of Security Analysis includes a reprint of the popular 1940 edition (Warren Buffett's favorite), minus some chapters. The deleted chapters, which can be found in the CD that accompanies the book, make room for (new) general introductory remarks to this edition and also to the eight major parts of the book, written by a variety of modern commentators. If all you really want is the 1940 edition, then the better choice for you is probably to buy the currently in-print reprint that's available (for a lower cost that this sixth edition). You could also buy one of the books actually printed back in 1940, but that will set you back big bucks, because original versions of Security Analysis are collectors' items today. For example, a good copy of the first printing of the 1934 edition easily runs into five figures.

When you download or buy Security Analysis sixth edition that's not available in the other editions are a short (two page) foreword by Warren Buffett and 10 essays by some of the most well-regarded modern investors and authors. Indeed, it was an honor to be asked to contribute to the sixth edition. The essays run about 15 pages, on average, and many of them are highly informative and useful. Those written by Seth Klarman, James Grant, Roger Lowenstein and Bruce Berkowitz were my favorites. As good as they are, though, they basically provide useful insights and more modern applications, rather than plow much new intellectual ground. It's hard to improve much on Graham and Dodd, even after 70 years.