11. Security Analysis - Benjamin Graham, David L. Dodd

In this episode of Compounding Interest, we review the seminal work Security Analysis by Benjamin Graham and David L. Dodd. Originally published in 1934, this text established value investing as a comprehensive philosophy centered on performing in-depth fundamental analysis. The authors draw a critical distinction between investment and speculation, defining an investment operation as one that, upon thorough study, promises safety of principal and a satisfactory return. Our review examines the core concept of intrinsic value, which represents the worth of a security justified by tangible facts like assets and earnings rather than psychological excesses. We explore Graham and Dodd’s methodology for analyzing balance sheets and income accounts to identify discrepancies between a security's price and its true value. Central to their approach is the "margin of safety," a principle providing room for error or market fluctuations by purchasing assets for less than they are worth. This episode highlights why these principles remain an essential roadmap for disciplined investors navigating unpredictable modern markets. Buy it on Amazon: https://www.amazon.com/dp/1264932405?tag=cmpndng-20 (Disclaimer: I may receive a small commission from purchases made through this link, at no extra cost to you)