The Father Of Security Analysis Eventually Gave Up On Security Analysis

According to Rob Arnott (of Fundamental Indexing fame), the man widely acknowledged as the Father of security analysis eventually came to believe that it no longer added reliable value for investors. Most people will know the name of this man to be Benjamin Graham, who along with David Dodd wrote the famous book titled simply, Security Analysis. The book is almost the equivalent of the Bible to investors. In Arnott’s book, The Fundamental Index: A Better Way To Invest, he cites this 1976 quote from Graham (who wrote Security Analysis in 1934):

“I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when our textbook Graham and Dodd was first published; but the situation has changed a great deal since then. In the old days any well-trained security analyst could do a good professional job of selecting undervalued issues through detailed studies; but in the light of the enormous amount of research now being carried on, I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost.”

Preet Banerjee
Preet Banerjee
...is an independent consultant to the financial services industry and a personal finance commentator. You can learn more about Preet at his personal website and you can click here to follow him on Twitter.
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  • Matt Simms

    Ben must’ve never tried Valueline. :)

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