Security Analysis

Security Analysis

Security Analysis

Background

Security Analysis is a legendary item in the world of investment. Benjamin Graham discussed how to analyze securities based on value rather than speculating. He defined scope and limitations of security and provide a framework on investment by focusing on margin of safety, finding out the intrinsic value and ensuring earning and capital structure of a stock, and finally buying at a discounted price.

Setting

The time was around 1949. There are tonnes of research and knowledge on how to make smart investment. However, those researches were oversimplified and not really helping investors to understand what value they should get. Benjamin Graham had an indeep study in US stock history. He argued that security analysis has to be based on fixed-value investment not speculation. He also pointed out fundamental elements which affect the result of analysis.

Theme

The book first off points out fundamental elements which affect the result of analysis, following with discussion of fixed-value investment and speculation. Then it walks through the dividend factor and earnings factor in common stock valuation. After those, it discusses the implication of asset value by balance-sheet analysis. At the end, it discusses the discrepancies between price and value.

Genre

The book is classified as Investment in my blog. This book is legendary.

Authors

Benjamin Graham (1894-1976), the father of value investing, has been an inspiration for many of today’s most successful business people. He is also the author of Securities Analysis and The Interpretation of Financial Statements. Bill McGowan is the founder and CEO of Clarity Media Group. A two-time Emmy Award-winning correspondent, McGowan has conducted hundreds of interviews with newsmakers, CEOs, celebrities, authors, editors, attorneys, and athletes. McGowan now uses that experience to coach and train everyone from corporate CEOs to celebrities such as New York Giants quarterback Eli Manning, the actress Katherine Heigl, and the jazz great Wynton Marsalis. He also speaks regularly to large corporate audiences at such companies as Credit Suisse, Conde Nast, and Campbell’s. Alisa Bowman has collaborated on seven New York Times bestselling books. Her articles have appeared in Prevention, Family Circle, , and many other national magazines.

Review

Personally, I am a man very into investment. However, I don’t have a strong background in finance or accounting. So, I am so keen to read books about investment.

I buy this book, “The Intelligent Investor”, because it is one of the books recommended by Warren Buffett. On top of that, one of my investment banker friend highly recommends me to read it before buying any stock. Hence, it is now in my collection.

This book is a very huge book, 700+ pages with extra CD contents around 200 pages. But, I can tell, you will definitely learn a lot from this book. It teaches you the mindset as a value investor; different kinds of securities and how to work out your own security analysis.

Both of them are essential reads if you want to be a value investor.

If you have any question, feel free to email me at admin@stanleyip.com. I will try my best to answer your.

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