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Security Analysis THIRD EDITION


cmattporter
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I have read the latest edition of security analysis which was fine except for the commentary. Michael Burry said to read the Third Edition because of the last of Graham and you probably know the story. I picked up a copy and was blown away. The third is completely different and makes the latest seem like a waste of paper. I have read almost half way with a notebook full of notes. I'm wondering if anyone else has done the same and to give me some insight on any differences they've picked up or opinions.

 

Thanks,

 

CMP

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Made a mistake, not the last one he wrote, but...

 

In relation to Security Analysis: "you can get a lot of the same info in a more accessible format elsewhere, but everyone says that Buffett’s favorite version is the 1951 edition. Yes there are differences, and the current version has a lot of non-Graham like stuff in it.

Good Investing,Mike"

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I decided that I needed to read it and if I remember right I read somewhere that Buffett thought the 2nd one was the best.  Who knows if he ever actually said that.  Anyway, I read it but I always wanted to read the 3rd because if I heard it has more information about the strategies he used at Graham Newman, particularly arbitrage.  My library didn't have the 3rd edition so i got the 4th instead.  It was not as good as the 2nd in my opinion.  I got the feeling that Graham had played a smaller role in the writing of it - they were getting a little more intricate with their formulas than I think Graham would have messed with.

 

Did you ever read any others?  I am wondering how it compares. Which one are you calling the last one?

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Guest rimm_never_sleeps

get the second that republished in 2008. lots of great introductions to chapters by the likes of Klarman Abrams Marks Grant and Berkowitz. As well as a foreward by w e buffett.

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get the second that republished in 2008. lots of great introductions to chapters by the likes of Klarman Abrams Marks Grant and Berkowitz. As well as a foreward by w e buffett.

 

year mean this ?

http://www.amazon.com/Security-Analysis-Foreword-Buffett-Editions/dp/0071592539/ref=sr_1_2?s=books&ie=UTF8&qid=1348198003&sr=1-2&keywords=security+analysis+second+edition+2008

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get the second that republished in 2008. lots of great introductions to chapters by the likes of Klarman Abrams Marks Grant and Berkowitz. As well as a foreward by w e buffett.

 

year mean this ?

http://www.amazon.com/Security-Analysis-Foreword-Buffett-Editions/dp/0071592539/ref=sr_1_2?s=books&ie=UTF8&qid=1348198003&sr=1-2&keywords=security+analysis+second+edition+2008

 

If you're thinking of getting that one, keep this in mind (I'm just cut & pasting an amazon review):

 

"This is a re-issue of the 2nd edition in more modern form. There's no need to talk about the content and importance of this book to value-investor. But some reminder concerning this edition: 1) It is an abridged edition of the original 2nd edition (published in 1940). A total of 10 chapters have been deleted. 2) The Appendix Notes was also deleted. That's why the publisher could keep the pages at around 700+ something. 3) In compensation for the missing chapters, the publisher has attached a CD which contained the pdf format of the original 2nd edition (with 52 complete chapters as well as the Notes). I think that's really the most valuable part of this edition. That why I commented that it's a more convenient version of the 2nd edition."

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You can also read the Berkshire Hathaway chairman letters for free. With all due respect to Graham, I think that Buffett is better at explaining the concepts that Graham teached.

 

Complicating life is easy.

The genius is in the simple things.

Ivory soap

 

Once you know them, you have a given circle of competences (and a well defined of circle of incompetences in order to not fool yourself), and know accounting enough, it has more to do with your behaviors than your knowledge.

 

Here is a list of behaviors that seem important to me:

 

- independant mind. Not being a contrarian or follow the crowd person. The crowd can be right. The crowd can be wrong. Act on your own judgement without being arrogant.

 

- stress control. Your stomach shouldn't dictate you how to act. Easy said, but few actually had the gut to invest in the biggest stock market crashes. Same thing for individual stocks. When they go down significantly and the intrinsic value is intact, let the maths chose, not your stomach.

 

- selectiveness: you have a house, a family, a car...why do you need to put your cash in 50 different stocks? Look for the fat pitches.

 

- patience: sit quietly in a room and wait.  Also, why should you care that much about daily fluctuations? Will you sell all your stocks at the end of the day?

 

- risk taking capacity. Margin of safety. Prudent financial leverage.

 

- learn from your experiences...and those of the others! If you don't learn from your mistakes because you think it's not your fault, it will "not be your fault" neither next time...

 

- etc. etc. etc.

 

Cheers!

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The 1st (1934) and 2nd (1940) editions are all Graham.  The 3rd (1951) edition is almost all Graham with a couple chapters on utilities written by someone else.  By the 4th edition (1962) there were various collaborators and it isn't Graham's voice as much.  The 5th edition (I believe 1985 or 1986) I thought was complete drivel.  Obviously it isn't Graham's voice as he had been gone almost 10 years.  Dodd actually wrote some kind of intro to it and in my view essentially said yeah, it's been a while, it's good to update it and I like getting paid!  I am not sure what the authors intended with the 5th edition, but it's truly awful.  The 6th edition (2008) is simply a re-issue of the 2nd edition with long pieces written by well known value people like Klarman, Berkowitz, Greenwald, etc.  Those commentaries are interesting and worth reading. 

 

I feel like I've seen in different places that Buffett says either the 2nd or the 3rd edition is his favorite.  For me, you can't go wrong with either the 2nd or the 3rd.  Both are better than anything else you can read on investing.  The Intelligent Investor 1st ed is essentially a summary of the 3rd edition of Security Analysis (it came out 2 years before).  It's obviously worth reading too, but in my view it's like the Cliff Notes to Security Analysis.  Buffett always says it's the best book on investing, but I've always felt that he says that for a wider audience.  While it may have been his first exposure to Graham, I have to believe he likes Security Analysis better.  But who is going to tell a mass audience they should read a 600 page "tome" that is "dense" and "complicated".  I put those words in quotes because that always seems to be the general description. 

 

If one read Security Analysis and Buffett's letters they would probably have all the investing background they need.

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i have the first and second. I'm going to buy the third. I didn't think it would be too different but given what I see here, perhaps I will shell out the big bucks for a copy.

Do you know where to find these old editions?

 

The first 3 and the 6th are widely available either at book stores or online.

 

Here's amazon.ca list for Security Analysis.

 

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i have the first and second. I'm going to buy the third. I didn't think it would be too different but given what I see here, perhaps I will shell out the big bucks for a copy.

Do you know where to find these old editions?

 

The first 3 and the 6th are widely available either at book stores or online.

 

Here's amazon.ca list for Security Analysis.

Thank you, amazon.ca has more options than its US counterpart!

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I agree 5th is not worth one's time.  Fourth a bit heavy on utilities.  First was good.  I've not read al of the other three edns -- but am inclined to agree with general sum of above comments -- best would be 2nd or 3rd.  I was not aware 6th did not have complete content of 2nd.

 

The primary merit of 6th, I think, it that it overshadows the 5th, on shelves.  Unfortunately, when I bought, 5th was latest and I got it ... and wondered why it did not come up to 4th, which I had previously read thru library.  To discover the 1st was amazing eye-opener.  About that time, found fool.com and good discussion ensued, including read-thru of the 1st.  They still have that board's content -- look for "Security Analysis -- the Book" in speaker's corner.

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I agree 5th is not worth one's time.  Fourth a bit heavy on utilities.  First was good.  I've not read al of the other three edns -- but am inclined to agree with general sum of above comments -- best would be 2nd or 3rd.  I was not aware 6th did not have complete content of 2nd.

 

The primary merit of 6th, I think, it that it overshadows the 5th, on shelves.  Unfortunately, when I bought, 5th was latest and I got it ... and wondered why it did not come up to 4th, which I had previously read thru library.  To discover the 1st was amazing eye-opener.  About that time, found fool.com and good discussion ensued, including read-thru of the 1st.  They still have that board's content -- look for "Security Analysis -- the Book" in speaker's corner.

 

I am not positive, but I am pretty sure that all the content that got stripped out of the 6th edition was put into a CD ROM that is included with the book.  Obviously if checked out from a library or found online, that content won't be there most likely.  For whatever reason I always look whenever I'm in a book store to see which ones they have.  I usually see the 2nd and 3rd editions, sometimes the 1st and sometimes the 6th.  I've never seen the 4th and haven't seen the 5th in years.

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They still have that board's content -- look for "Security Analysis -- the Book" in speaker's corner.

 

How can I view the entire thread?  I can only seem to see the last page from post 1908 - 1931.

 

Never mind, I figured it out.

 

Can i get a link pleas for some reason i am only getting a few threads.

 

TIA

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This is a URL for the list fof posts, starting from the very first in May-2000, when the board was set up.

Choose unthreaded view and you should be able to browse thru in increasing chronological order.

 

http://boards.fool.com/security-analysis-the-book-113813.aspx?mid=12568177&sort=postdate&days=30

 

Generally, Motley Fool has a quite flexible URL scheme.  The 113813 is the board id, and the 1256817 is the message id, in this case the greetings from the software when the board was established. 

 

You can use

http://boards.fool.com/Message.aspx?mid=12568177&sort=postdate

to get to a particular message.

 

I thought that

http://boards.fool.com/investing-books-10099.aspx?bid=113813

would get to the board itself, but instead it gets to a list of five boards -- some interesting titles.

 

Happy reading!

 

 

 

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[EDIT] The 5th edition (1988) is a waste of paper and clearly Graham had nothing to do with it the 1940ed is still the classic (also the 6th edition revised).  Greenwald says Graham's involvement in the 4th ed was also limited. Outside individuals certainly contributed to certain sections i.e. discussion on utility companies, but the whole of it certainly feels and reads very much like graham to me. 

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I completely agree with Burry.  The 4th edition (1961) is a waste of paper and clearly Graham had nothing to do with it (since it was I think 1988) but not the 1940ed which is the classic (also the 5th edition revised).  Greenwald says Graham's involvement in the 4th ed was also limited, but I don't necessarily agree.  Outside individuals certainly contributed to certain sections i.e. discussion on utility companies, but the whole of it certainly feels and reads very much like graham to me.

 

I think you got some of the years and editions wrong.  When you say the 4th is a waste of paper and Graham had nothing to do with it, I think you mean the 5th edition.  The 1940 edition was reissued as the 6th (not 5th) edition.  I completely agree with you though the 5th edition is a waste of paper.  I was shocked at how bad it is.  I always got the feeling Dodd realized it, but was kind of like "hey, everyone else is getting rich in the market [this was the mid to late 1980s], so why shouldn't I, as one of the deans of investing make a few bucks too?"

 

I think by the time it got to the 4th edition Graham was already out of the investment business (since about 1956) and have been in LA for 4 or 5 years teaching at UCLA and dabbling with various mistresses.  I think the intellectual stimulation provided him by investing was largely gone by that time and continued to wane until it reached almost zero (never quite zero though).  I recall reading somewhere that at his 80th birthday party he gave a speech in which he reflected on his life and didn't mention his investing career.

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