1995: What's the best edition of Security Analysis?

AUDIENCE MEMBER: Yeah. My name is Michael Johnson. I’m a native to Omaha, and however, my family and I are Americans living abroad in Dhahran, Saudi Arabia.

My question is related to intrinsic value and Ben Graham’s “Security Analysis.”

I read a book earlier this year by Janet Lowe, who said that you were more toward the first or second editions of “Security Analysis” and not so much toward the fourth.

Yet, the fourth edition seemed to move more toward growth and value being kind of joined at the hip, like you’ve said in your last few annual reports.

And so, if I’m a person who’s always studying security analysis like I do — I think I spend more time with that — do you think I need to get those first editions? Or is the fourth edition kind of more of what you’ve moved toward, with your comments such as value and growth are joined at the hip?

WARREN BUFFETT: Janet Lowe is here, incidentally, today. She wrote a very good book on Ben Graham. I recommend that any of you that haven’t read it, go out and buy a copy.

The — I still prefer the — I think the second edition is cheaper to buy than the first edition, by some margin. And I think it’s basically the same book. So, I — that’s the one I would recommend. I — it isn’t because of differences on value and growth.

I just think that the reasoning is better and more consistent throughout the second edition, which is really the last one that Ben was the hundred percent — along with Dave Dodd helping him in various ways — was responsible for writing.

So, I think that the book has gotten away, to quite an extent, from both Graham’s thinking and from his way of expressing himself. So I really — but I have no quarrel with anybody that wants to read later editions at all.

I do think, probably, the second edition, if you’re a real student of security analysis and you read and understand that, you’ll — you should do all right.

In terms of — a lot of the mistakes that were made, in terms of junk bonds and accounting and all of that sort of thing, were covered in 1934 in that first edition, and subsequently in 1940 in the second edition. There’s a lot of meat in there.

Later on, you know — I must admit, I didn’t read the last edition as carefully as the earlier ones. But it struck me, it was — it — what was said was not as important and it wasn’t said as well. And it was more expensive. (Laughter)

Charlie, you have any thoughts on that?

CHARLIE MUNGER: No.