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Seth Klarman: Sacrilege but necessary rethinking of Graham

Should it have passed your attention, here in June 2023 there is a new seventh edition of perhaps the most recognized investment book among fundamental investors – David Dodd and Benjamin Graham’s Security Analysis.

With a first publication back in 1934, it must be said to have stood the test of time and in the new edition a number of the world’s most recognized value investors give their reflections on the different parts of the book.

In an interview with Institutional Investor, Klarman says that there are parts of the book where he has had to challenge the book’s premises because the world – not so surprisingly – has changed in the almost 90 years since its publication. According to Klarman, the book’s major focus on companies’ balance sheets is not as critical as it was almost a century ago, but the world is certainly not just cash flow:

Graham and Dodd’s emphasis on book value may have been supplanted by newer metrics, but their focus on balance sheet analysis remains valid.

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