Notes - Security Analysis

Topics: Common stock, Stock, Security Pages: 104 (34148 words) Published: June 22, 2013
Notes to Ben Graham’s Security Analysis
2nd and 3rd Editions
Vinod Palikala August, 2009

As Graham notes in the preface, the book is “concerned chiefly with concepts, methods, standards, principles, and, above all, with logical reasoning”. To get the most out of this book, it is essential to see past the many seemingly rigid guidelines to understand Graham’s reasoning. This is my attempt to summarize the main message Ben Graham is trying to convey. In the book, it is difficult to relate the specific topic being discussed with the broader context. I added comments and formatted the notes to make it easier to understand the overall message. In many cases, I ended up just noting the most important points of each chapter. Part I is from the 3rd edition as this part is covered much more comprehensively in the 3rd edition. All the other parts are from 2nd edition which I found to be better organized and also easier to comprehend.

Contents
Part I: Survey and Approach ......................................................................................................... 4 Chapter 1: Introduction .......................................................................................................... 4 Chapter 2: The Scope and Limitations of Security Analysis .......................................................... 4 Chapter 3: The Behavior of the Security Markets ....................................................................... 6 Chapter 4: Investment and Speculation .................................................................................... 7 Chapter 5: Investment Policy .................................................................................................. 9 Chapter 6: Nature and Sources of the Analyst’s Information ....................................................... 10 Chapter 7: Quantitative and Qualitative Factors in Security Analysis. The Margin of Safety Concept.10 Chapter 8: Classification of Securities ...................................................................................... 13 Part II: Fixed Value Investments ................................................................................................... 14 Chapter 6: The Selection of Fixed Value Investments ................................................................ 14 Chapter 7: The Selection of Fixed Value Investments: Second and Third Principles........................ 15 Chapter 8: Specific Standards for Bond Investment ................................................................... 16 Chapter 9: Specific Standards for Bond Investment ................................................................... 17 Chapter 10: Specific Standards for Bond Investment ................................................................. 17 Chapter 11: Specific Standards for Bond Investment ................................................................. 18 Chapter 12: Special Factors in the Analysis of Railroad and Public Utility Bonds ............................ 18 Chapter 13: Other Special Factors in Bond Analysis ................................................................... 19 Chapter 14: The Theory of Preferred Stocks ............................................................................. 19 Chapter 15: Technique of Selecting Preferred Stocks for Investment ........................................... 20 Chapter 16: Income Bonds and Guaranteed Securities ............................................................... 20 Chapter 17: Guaranteed Securities.......................................................................................... 20 Chapter 18: Protective Covenants and Remedies of Senior Security Holders ................................. 21 Chapter 19: Protective Covenants ........................................................................................... 21 Chapter 20: Preferred Stock Protective Provisions. Maintenance of Junior Capital .......................... 21 Chapter...
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