Security Analysis: Sixth Edition, Foreword by Warren Buffett »

Benjamin Graham is considered to be the founder of value investing and taught at Columbia University’s Graduate School of Business.

David L. Dodd was a colleague of Graham’s at Columbia University, where he was an assistant professor of finance.

“A roadmap for investing that I have now been following for 57 years.”
—From the foreword by Warren E. Buffett

The 1940 edition of Security Analysis is considered the bible of value investing. McGraw-Hill continues its proud tradition with this new sixth edition that will serve as a touchstone for a new generation of investors.

The leading “Masters” of value investing have updated Graham and Dodd’s classic work with more than 200 pages of new commentary:

• Seth A. Klarman, president of The Baupost Group, L.L.C. and author of Margin of Safety
• James Grant, founder of Grant's Interest Rate Observer, general partner of Nippon Partners
• Jeffrey M. Laderman, twenty-five year veteran of BusinessWeek
• Roger Lowenstein, author of Buffett: The Making of an American Capitalist and When America Aged and Outside Director, Sequoia Fund
• Howard S. Marks, CFA, Chairman and Co-Founder, Oaktree Capital Management L.P.
• J. Ezra Merkin, Managing Partner, Gabriel Capital Group .
• Bruce Berkowitz, Founder, Fairholme Capital Management.
• Glenn H. Greenberg, Co-Founder and Managing Director, Chieftain Capital Management
• Bruce Greenwald, Robert Heilbrunn Professor of Finance and Asset Management, Columbia Business School
• David Abrams, Managing Member, Abrams Capital

The accompanying CD-ROM contains the entire 1940 text.

“Benjamin Graham is the father of investment analysts everywhere, originally sparking the debate for a credential to professionalize the industry which led to the CFA Charter. He transformed the practice of financial analysis from trade to science, starting with his groundbreaking book, Security Analysis, first published in 1934. This edition, with new commentary by some of today’s finest investors, belongs on every investment professional’s shelf.”

—Jeffrey J. Diermeier, CFA, president and CEO, CFA Institute

Benjamin Graham is considered to be the founder of value investing and taught at Columbia University’s Graduate School of Business.

David L. Dodd was a colleague of Graham’s at Columbia University, where he was an assistant professor of finance.

Financial Times

“The biggest event in the world of investment publishing this year looks certain to be the re-publication of a book that came out almost three-quarters of a century ago.”

Foreword Warren E. Buffett Buffett, Warren E.

Preface to the Sixth Edition: The Timeless Wisdom of Graham and Dodd Seth A. Klarman Klarman, Seth A.

Introduction to the Sixth Edition: Benjamin Graham and Security Analysis: The Historical Backdrop James Grant Grant, James 1

Pt. I Survey and Approach

Introduction to Part I: The Essential Lessons Roger Lowenstein Lowenstein, Roger 39

1 The Scope and Limits of Security Analysis, the Concept of Intrinsic Value 61

2 Fundamental Elements in the Problem of Analysis, Quantitative and Qualitative Factors 75

3 Sources of Information 89

4 Distinctions Between Investment and Speculation 100

5 Classification of Securities 112

Pt. II Fixed-Value Investments

Introduction to Part II: Unshackling Bonds Howard S. Marks Marks, Howard S. 123

6 The Selection of Fixed-Value Investments 141

7 The Selection of Fixed-Value Investments: Second and Third Principles 151

8 Specific Standards for Bond Investment 169

9 Specific Standards for Bond Investment (Continued): See Accompanying CD

10 Specific Standards for Bond Investment (Continued) 180

11 Specific Standards for Bond Investment (Continued): See Accompanying CD

12 Special Factors in the Analysis of Railroad and Public-Utility Bonds: See Accompanying CD

13 Other Special Factors in Bond Analysis: See Accompanying CD

14 The Theory of Preferred Stocks: See Accompanying CD

15 Technique of Selecting Preferred Stocks for Investment 190

16 Income Bonds and Guaranteed Securities 202

17 Guaranteed Securities (Continued) 215

18 Protective Covenants and Remedies of Senior Security Holders 229

19 Protective Covenants (Continued)242

20 Preferred-Stock Protective Provisions. Maintenance of Junior Capital See Accompanying CD

21 Supervision of Investment Holdings 252

Pt. III Senior Securities With Speculative Features

Introduction to Part III: "Blood and Judgement" J. Ezra Merkin Merkin, J. Ezra 265

22 Privileged Issues 289

23 Technical Characteristics of Privileged Senior Securities 299

24 Technical Aspects of Convertible Issues 313

25 Senior Securities With Warrants. Participating Issues, Switching and Hedging: See Accompanying CD

26 Senior Securities of Questionable Safety 323

Pt. IV Theory of Common-Stock Investment. The Dividend Factor

Introduction to Part IV: Go with the Flow Bruce Berkowitz Berkowitz, Bruce 339

27 The Theory of Common-Stock Investment 348

28 Newer Canons of Common-Stock Investment 366

29 The Dividend Factor in Common-Stock Analysis 376

30 Stock Dividends: See Accompanying CD

Pt. V Analysis of the Income Account. The Earnings Factor in Common-Stock Valuation

Introduction to Part V: The Quest for Rational Investing Glenn H. Greenberg Greenberg, Glenn H. 395

31 Analysis of the Income Account 409

32 Extraordinary Losses and Other Special Items in the Income Account 424

33 Misleading Artifices in the Income Account. Earnings of Subsidiaries 435

34 The Relation of Depreciation and Similar Charges to Earning Power 453

35 Public-Utility Depreciation Policies: See Accompanying CD

36 Amortization Charges from the Investor's Standpoint: See Accompanying CD

37 Significance of the Earnings Record 472

38 Specific Reasons for Questioning Or Rejecting the Past Record 487

39 Price-Earnings Ratios for Common Stocks. Adjustments for Changes in Capitalization 496

40 Capitalization Structure 507

41 Low-Priced Common Stocks. Analysis of the Source of Income 520

Pt. VI Balance-Sheet Analysis. Implications of Asset Values

Introduction to Part VI: Deconstructing the Balance Sheet Bruce Greenwald Greenwald, Bruce 535

42 Balance-Sheet Analysis. Significance of Book Value 548

43 Significance of the Current-Asset Value 559

44 Implications of Liquidating Value. Stockholder-Management Relationships 575

45 Balance-Sheet Analysis (Concluded) 591

Pt. VII Additional Aspects of Security Analysis. Discrepancies Between Price and Value

Introduction to Part VII: The Great Illusion of the Stock Market and the Future of Value Investing David Abrams Abrams, David 617

46 Stock-Option Warrants: See Accompanying CD

47 Cost of Financing and Management 633

48 Some Aspects of Corporate Pyramiding 644

49 Comparative Analysis of Companies in the Same Field 654

50 Discrepancies Between Price and Value 669

51 Discrepancies Between Price and Value (Continued) 688

52 Market Analysis and Security Analysis 697

Pt. VIII Global Value Investing

Globetrotting with Graham and Dodd Thomas A. Russo Russo, Thomas A. 711

Appendix See Accompanying CD

Index 735