Ben Graham wrote Security Analysis in 1934. The second edition would be published six years later and is heralded as the bible, a beast of a book, on the art of financial analysis. But almost two decades before the first printing of Security Analysis, Graham laid the groundwork for his thought process while writing for The Magazine of Wall Street.

I came across 33 of his articles written from 1917 to 1921 (he wrote for the magazine up till 1927, I believe) and have been reading them over the past two weeks. Combined, they offer some insight into his early investment philosophy, investigative mindset, and process of analyzing companies.

The biggest takeaway is how inconsistent company reporting was back then. There were no rules. The SEC didn’t exist. Graham repeatedly complained about the lack of available information and even goes into detail about how he had to look up war tax records to reverse engineer company earnings.

Another takeaway was his consistency in breaking down the best, worst, and most likely scenarios around a company. He also repeatedly focused on one thing after relating the “story” behind a stock – “Let us see to what extent this opinion is justified by the facts.” Beyond that, was a sense of the impact World War I, and its end, had on companies and the economy.

Rather than diving into the details of each article, I thought I’d share some of the broader wisdom wrapped into his analysis. Continue Reading…