Security Analysis by Benjamin Graham, David Dodd, Seth A. Klarman

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00:56 The investor’s edge 04:15 Beyond the surface numbers 07:42 The price-value puzzle 11:09 Reading between the lines 14:34 The foundation of value

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Here are my notes on the key points from Security Analysis: Investment Fundamentals: - True investing requires preserving capital while earning fair returns - Success comes from analytical methods, not just picking stocks - Focus on fundamentals: hard assets, management quality, and genuine earning power - Looking beyond surface numbers is essential Analysis Framework: - Examine both financial statements and broader market position - Study company performance through both good and bad times - Consider working capital ratios - aim for 2:1 current assets to short-term debt - Track metrics over time and compare across similar companies - Look for hidden value in assets recorded at outdated prices Price vs Value: - Market prices often diverge significantly from business reality - Find opportunities when market fear creates irrational pricing - Build in margin of safety by buying assets at deep discounts - Look beyond reported earnings to understand true earning power - Consider stabilizing factors like steady cash flows from essential services Reading Financial Statements: - Income statements need careful interpretation - Question "extraordinary" expenses and accounting changes - Look at earnings across multiple years, not just recent performance - Watch for hidden problems like deferred maintenance - Think like a business owner when evaluating adjustments Balance Sheet Analysis: - Balance sheet shows fundamental financial strength - Working capital indicates business resilience - Conservative debt levels help survive downturns - Study how efficiently assets generate returns over time - Strong balance sheets can turn market panic into opportunity