Security Analysis: Principles and Technique (Seventh Edition) by Benjamin Graham

Security Analysis: Principles and Technique (Seventh Edition) by Benjamin Graham

PART I
Survey and Approach

INTRODUCTION TO PART I
Benjamin Graham—in His Time and
Ours
by Roger Lowenstein
Of all the stocks Benjamin Graham bought over the course of his
career, none were more influential than the odd lot of U.S. Steel
purchased by his mother. Left a widow in 1904, she tried to keep
up her husband’s import business, then ran a boardinghouse; both efforts
failed. In 1907, with bullish sentiment riding high, she purchased Steel on
margin. Later that year, Wall Street succumbed to a panic, and her account
was wiped out. Such was 13-year-old Ben’s introduction to investing.
Graham was to learn the lesson more than once. His early history is
important, because it was the source of his insight into investing. He grew
up in New York City and managed to attend Columbia University despite
his family’s meager savings. Upon graduation, the deans of three
departments (mathematics, philosophy, and English) offered him teaching
jobs, but the dean of Columbia College1
 liked to send prize pupils
downtown, to Wall Street. Graham went to work in 1914 in the bond
department of Newburger, Henderson & Loeb, at $12 a week. World War I
erupted months later. Although the war cast a pall on Wall Street, as it
became clear that America was to provision Europe, the market turned
bullish. Graham tackled securities with the same intellectual curiosity he
had displayed in school. Corporate information in that preregulatory era
was scarce. Investors in stocks were not truly investors; they were
speculators betting on trends. Graham was different.
Almost from the first, he took to analyzing securities on the basis of
their asset value, though obtaining information required considerable

Security Analysis: Principles and Technique (Seventh Edition) by Benjamin Graham