Security Analysis by Benjamin Graham and Dodd - Notes ebook pdf

Security Analysis, the revolutionary book on fundamental analysis and investing, was first published in 1934, following unprecedented losses on Wall Street.

Benjamin Graham and David Dodd chided Wall Street for its myopic focus on a company's reported earnings per share (eps), and were particularly harsh on the favored "earnings trends." They encouraged investors to take an entirely different approach by estimating the rough value of the operating business that lay behind the security. They have given actual examples of the market's tendency to irrationally under-value certain out-of-favor stocks.

The book is must read for any Stock Market Investor, fundamental analyst or equity research professional.  

The Magic Multiple

Benjamin Graham spent decades analysing thousands of companies and documented the values investing framework. He introduced a new multiple at a later stage to make life easy for investors who want to pick potential winners from a large number of stocks. He gave the following formula to calculate this magic multiple:

Magic Multiple = Price Earning Ratio (PE) * Price to Book Ratio (PBV)

This multiple helps avoid confusion when one ratio indicates that a stock is cheap while the other shows that it is costly.  

Benjamin Graham's Net Working Capital Test

Benjamin Graham created many techniques for discovering undervalued stocks which were written in his famous book "The Intelligent Investor".  One of them is an easy but very powerful technique called "Working Capital Test".

This formula is easy to apply and very powerful in revealing really bargain stocks. Below are the steps to calculate the "Net Working Capital" and it's relation with market value of the stock.

Step 1: Find the days list of stocks that have hit new lows for the past year.

Step 2: From the Company annual report or recent quarterly report see the value of the net working capital.

Net Working Capital = Current Assets - Total Liabilities*

Benjamin Graham Interview

A short transcript of an interview with the father of value investing , Sir Benjamin Graham, taken way back in 1960.

Question - Can the average manager of institutional funds obtain better results than the Dow Jones Industrial Average or the S&P Index over the years?

Answer - No. In effect, that would mean that the stock market experts as a whole could beat themselves--a logical contradiction.

Question - Do you think, therefore, that the average institutional client should be content with the DJIA results or the equivalent?

The Intelligent Investor by Benjamin Graham ebook PDF

The Intelligent Investor by Benjamin Graham has become the bible of value Investing and is being read by all kinds of Investors all over the world. The concepts published in the book some 70+ years ago is still so true and valid in today's investing environment that more and more people are becoming disciples of Value Investing philosophy. 

Sir Benjamin Graham coined the concept of Value Investing which Warren Buffet, Peter Lynch and many other successful investors followed to create humongous amount of wealth for themselves and stakeholders. If you are also a value investor or desire to become one, then this book is a must read. 

Intrinsic Value - By Benjamin Graham

What is Intrinsic Value? The Security Analysis book by Benjamin Graham explains the concept of Intrinsic value and its application in selecting the stocks. Following is a video to demonstrate concept of intrinsic value: