Being a loyal value investor I have read the The Intelligent Investor
and Security Analysis
by Benjamin Graham. The books are the abridged version of the bible and the bible respectively, on value investing. The books contain Benjamin Graham’s ideas on investment in stocks, bonds and other asset classes.
and Security Analysis by Benjamin Graham. The books are the abridged version of the bible and the bible respectively, on value investing. The books contain Benjamin Graham’s ideas on investment in stocks, bonds and other asset classes.Unfortunately, Graham wrote many more interesting articles in various publications that are now inaccessible to most people. I found some interesting old writings of Graham which I have posted on my website Value Walk Resource Page if anyone cares to see them. They include 10 lectures Graham gave in Columbia University, his appearance before the Senate in 1954, and the Graham-Newman Partnership letters.
However, I was very excited when Jason Zweig came out with a book dedicated to various articles written by Graham spanning his career on Wall Street. The book is titled Benjamin Graham, Building a Profession : The Early Writings of the Father of Security Analysis
. Zweig compiled many of Graham’s writings with a bit of his own commentary on them.
However, I was very excited when Jason Zweig came out with a book dedicated to various articles written by Graham spanning his career on Wall Street. The book is titled Benjamin Graham, Building a Profession : The Early Writings of the Father of Security Analysis
. Zweig compiled many of Graham’s writings with a bit of his own commentary on them.I was also excited to read the book because I love Jason Zweig’s writing. Here is a brief bio of the author from Amazon.com for anyone who has not heard of Jason Zewig. Jason Zweig is an investing and personal finance columnist for The Wall Street Journal. Previously, he was a senior writer at Money magazine, mutual-funds editor at Forbes magazine, and a guest columnist for Time and cnn.com. He is the editor of the revised edition of Benjamin Graham's The Intelligent Investor, the classic text that Warren Buffett has called "by far the best book about investing ever written." Zweig serves on the editorial boards of Financial History magazine and The Journal of Behavioral Finance.
, the classic text that Warren Buffett has called "by far the best book about investing ever written." Zweig serves on the editorial boards of Financial History magazine and The Journal of Behavioral Finance.Zweig decides the culture on Wall Street when Graham came to the profession. It was one of high speculation, people would invest based on what the hot stock was and did little if any analysis into stocks. Graham was very critical of Wall Street for putting their selfish interests ahead of the interests of the common investor. Graham was an early proponent for investor rights. Graham also believed that the advice (even when not selfish) offered to investors was foolish and speculative.
I cannot review the whole book because it is really a collection of various essays, but I will list some of the book discusses, and discuss the most interesting aspect of the book.
:
• “Should Security Analysts Have a Professional Rating? The Affirmative Case”
Financial Analysts Journal (1945)
• “Toward a Science of Security Analysis”
Financial Analysts Journal (1952)
• “Inflated Treasuries and Deflated Stockholders: Are Corporations Milking Their Owners?”
Forbes (1932)
• “The Future of Financial Analysis”
Financial Analysts Journal (1963)
• “Controlling versus Outside Stockholders”
Virginia Law Weekly (1953)
One of the most interesting aspect books was a case study Graham did on US Steel in 1937. He asked how one can calculate whether the stock was undervalued or not. Is the stock cheap because it is trading at 80 and:
1. Normalized earnings are $13 per share?
2. It is cheaper than the broad stock market?
3. Next year earnings will increase?
4. During the previous two bull markets the stock went far higher than $80 per share?
I wrote a more detailed article on this case study on my website if you want to check out more in depth Benjamin Graham: US Steel Case Study(1937)
Another chapter I enjoyed contained was two interviews conducted with Benjamin Graham in the mid 1970s right before his death in 1976. It is interesting to get Graham’s views then, and how they changed from his earlier writings during and after the depression era. Graham is asked about the efficient market theory which was becoming very popular at the time. Graham seems to contradict himself. He states that although he believes the market is efficient now, he recently conducted a study 1925-1975 of net-nets and how they have outperformed the market. He also states that stocks trading at a P/E of 7 doubled the overall market from 1925-1975. If Graham believed in the efficient market why would he include 1975 and the most recent years when the market was supposedly efficient. (I found one of the interviews online, Graham interview, I could not find the other interview)
I found this interesting because with all due respect to John Bogle and other advocates of indexing they selectively quote Graham. Many efficient market believers state that Graham believed in the efficient market theory towards the end of his life. I find this disingenuous, and if anyone reads the interviews I think they will come to a similar conclusion.
One criticism of the book is the lack of commentary by Zweig. Anyone who read the updated version of The Intelligent Investor knows that Jason Zweig wrote hundreds of pages of excellent commentary on the book. However, in this book Zweig only provides a few pages of his own thoughts. Although it is great reading Graham himself, I would have preferred more insight from Zweig also.
I think someone who never read Security Analysis or the Intelligent Investor will not appreciate this book. I would not recommend the book for someone who is not familiar with Graham. However, if you have read the two books and appreciate Graham you will enjoy this book. The book obviously is not a thriller but you will gain a lot of insight into Graham’s thoughts that were not discussed in any of his books.
To purchase the book on Amazon.com click on the following link Benjamin Graham, Building a Profession: The Early Writings of the Father of Security Analysis
Disclosure: I receive free books from book publishers asking me to review them. In addition I sometimes request specific books that look interesting. I try to review the books that I think will be the most interesting. I have a material connection because I received a free copy of this book from the publisher. In addition I receive a small commission if you click on the above link and buy the book (or anything else) from Amazon.com It does not cost you a penny more. So I get a commission, Amazon gets a sale, and you get your book so it is a win for everyone.
