Book Club: "Security Analysis" by Graham & Dodd

Please join me at the Security Analysis Book Club to read Security Analysis by Graham & Dodd, a must-read for anyone who is serious about value investing.

I had previously attempted to read Security Analysis (1951 Third Edition) by Benjamin Graham and David Dodd. It is a tough read. I stopped at around the chapter 40 mark and return the book to the library.

When I saw Geoff Gannon from Gannon On Investing doing a series discussing Security Analysis (1940 Second Edition), I thought it would be a good time for me to start again and attempt to finish the entire book. Geoff seems to have paused the series, but I intend to press on. I hope you will join me in my quest to "conquer" Security Analysis.

The "Security Analysis" Book Club
The purpose of this book club is to:

1. Help you (and me) read Security Analysis cover-to-cover.
2. Improve our understanding of the text by discussing what we have read (using the comments section, which you can subscribe to if you comment using a Google/Blogger account).

The principles/rules of this book club are:

1. Read the chapter before you comment (contribute, don't "leech").
2. Write a comment after you have read the chapter (to maintain a sense of community and encourage each other to keep pressing on!).
   
3. Be nice.
4. Keep me accountable. E-mail me if I ever stop!
5. If you have any comments, suggestions, or tips on improving my writing, please e-mail me!
   

The outcome for members of this book club should be:

1. To have read "Security Analysis" in its entirety.
2. To be able to perform security analysis at a satisfactory level.
   

The Book: "Security Analysis" by Benjamin Graham and David Dodd
If you already have the 1934 First Edition or 1951 Third Edition, you can follow along using those editions. There may be some differences between the editions, but the concepts/themes should be similar.

If you don't yet have a copy, I would recommend buying the 2008 Sixth Edition - it is based on the 1940 Second Edition, which I will be using, but it also includes a forward by Warren E. Buffett and additional commentary by legendary value investors and authors: Seth A. Klarman, James Grant, Jeffrey M. Laderman, Roger Lowenstein, Howard S. Marks, J. Ezra Merkin, Bruce Berkowitz, Glenn H. Greenberg, Bruce Greenwald, and David Abrams. I don't have the sixth edition yet (anyone want to buy me one? ;), but I think the additional commentary is worth paying for.

As Geoff had suggested, if you need to brush up on some basic accounting, you may want to read The Interpretation of Financial Statements by Benjamin Graham and Spencer B. Meredith.

Outbound Links:

• Geoff Gannon's Commentary on First and Second Preface
• Geoff Gannon's Commentary on Introduction (Part 1)
• Barel Karsan's Summaries on Security Analysis

Book Club Links:

• Second Edition and First Edition Prefaces.
• Introduction: Problems of Investment Policy.
• Chapter 1: The Scope and Limitations of Security Analysis. The Concept of Intrinsic Value.
• Chapter 2: Fundamental Elements in the Problem of Analysis. Quantitative and Qualitative Factors.
• Chapter 3: Sources of Information.
  

P.S. This post was featured in the 109th Festival of Stocks at Fat Pitch Financials.