Bullbear Buffett : Security Analysis: Principles & Technique by Benjamin Graham and David Dodd

Wednesday, 24 December 2025

Security Analysis: Principles & Technique by Benjamin Graham and David Dodd | Audiobook Summary P- 2

Unlock the secrets of smart investing with Benjamin Graham and David Dodd’s classic Security Analysis.

This video breaks down the core principles of investment, bonds, stocks, and speculative securities in simple, actionable terms. Learn how to separate real value from market illusions, protect your money, and make informed decisions like the world’s top investors. Parts Four to Eight of Security Analysis guide the listener through the core principles of common-stock investing and advanced security analysis. Part Four focuses on common-stock investment theory. It explores the New Era theory, the importance of dividends, earnings power, asset value, and how intrinsic value relates to market price. These chapters teach investors how to evaluate stocks beyond price movements, emphasizing real business strength and long-term potential. Part Five dives into the analysis of the income account. It explains how to read financial statements critically, understand extraordinary gains or losses, identify misleading practices, and assess depreciation, amortization, and surplus reserves. Investors learn how to separate real profits from accounting illusions. Part Six covers balance-sheet analysis. It breaks down cash assets, receivables, inventory, fixed assets, intangibles, liabilities, funded debt, and capital stock. This section equips investors to assess a company’s financial health and stability. Part Seven examines additional aspects of security analysis. It introduces comparative analysis of companies, group studies of securities, market analysis, discrepancies between price and value, and classification of securities by character. This part expands the investor’s perspective beyond single companies to sectors and market trends. Part Eight presents the global conclusions. It unifies all previous lessons under the central principle of investing — the margin of safety. This final part emphasizes patience, discipline, and informed decision-making as the keys to long-term investment success. Together, these sections provide a complete roadmap for intelligent investing. They teach how to analyze companies deeply, evaluate risks and opportunities, and make decisions that protect capital while pursuing growth. The listener will gain practical insights and timeless strategies for building wealth through disciplined security analysis. 00:00 – Introduction to Parts Four to Eight Part IV – Theory of Common-Stock Investment 01:48 – Start of Part IV 03:30 – Chapter 18: New Era Theory 06:04 – Chapter 19: The Dividend Factor in Common-Stock Valuation 08:54 – Chapter 20: Earnings Power and Stability 11:44 – Chapter 21: The Asset Value Factor 14:16 – Chapter 22: Relation of Intrinsic Value to Market Price Part V – Analysis of the Income Account 17:32 – Start of Part V 19:50 – Chapter 23: The Significance of the Income Account 22:39 – Chapter 24: Extraordinary Losses and Profits 25:03 – Chapter 25: Misleading Artifices in the Income Account 27:52 – Chapter 26: Methods of Depreciation and Depletion 30:41 – Chapter 27: Amortization and Sinking Funds 33:16 – Chapter 28: Maintenance of Surplus Reserves 35:50 – Chapter 29: Relation of Depreciation to Maintenance Part VI – Balance-Sheet Analysis 38:21 – Start of Part VI 40:49 – Chapter 30: Balance-Sheet Analysis in General 43:32 – Chapter 31: Cash Assets 45:57 – Chapter 32: Receivables and Inventory 48:31 – Chapter 33: Fixed Assets 50:57 – Chapter 34: Intangibles 53:19 – Chapter 35: Current Liabilities 55:41 – Chapter 36: Funded Debt 58:06 – Chapter 37: Capital Stock Part VII – Additional Aspects of Security Analysis 1:00:27 – Start of Part VII 1:02:03 – Chapter 38: Comparative Analysis of Companies 1:04:16 – Chapter 39: Group Studies of Securities 1:06:13 – Chapter 40: Market Analysis and Security Analysis 1:09:18 – Chapter 41: Discrepancies between Price and Value 1:11:51 – Chapter 42: Classification of Securities by Character Part VIII – Global Conclusions 1:14:31 – Start of Part VIII 1:16:43 – Chapter 43: The Margin of Safety as the Central Concept of Investment

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My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

Bullbear Buffett

Wednesday, 24 December 2025

Security Analysis: Principles & Technique by Benjamin Graham and David Dodd | Audiobook Summary P- 2

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All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

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Warren Buffett

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