Modern Security Analysis: Understanding Wall Street Fundamentals

by Martin J. Whitman, Fernando Diz

A legendary value investor on security analysis for a modern era This book outlines Whitman's approach to business and security analysis that departs from most conventional security analysts. This approach has more in common with corporate finance than it does with the conventional approach. The key factors in appraising a company and its 1) Credit worthiness, 2) Flows―both cash and earnings, 3) Long-term outlook, 4) Salable assets which can be disposed of without compromising the going concern, dynamics, 5) Resource conversions such as changes in control, mergers and acquisitions, going private, and major changes in assets or in liabilities, and 6) Access to capital. Written by Martin J. Whitman and Fernando Diz, Modern Security Analysis meets the challenge of today's marketplace by taking into account changes to regulation, market structures, instruments, and the speed and volume of trading.

Genres: Finance, Business, Nonfiction

496 pages, Hardcover

First published January 1, 2013

Reviews

[todd · Rating 4 out of 5]

Marty Whitman is a legend in value investing. 88 years young and still forcefully explaining how markets aren't always efficient and how disciplined analysis and purchasing are the keys to long-term investment sense. Throughout the book he points to what he believes are serious flaws or oversimplifications among modern portfolio theorists on the one hand and Graham and Dodd on the other. Since the latter pair have long departed the scene, there's no chance for them to come back and say, "Of course you want to look at balance sheets as well as earnings. But most people aren't careful enough about earnings, so let's get first things first!" A lot of the contrast to Graham and Dodd may strike more experienced readers as a debate between Baptists and Methodists, where there is little real difference in substance but no lack of enthusiasm for professing the "right" way.

Whitman and Diz (Professor at the Whitman School of Business at Syracuse)do a wonderful job in making the reader stretch beyond traditional investment analytic constructs. Balance sheets matter. So does the cap structure. If you are going to be a great investor don't buy growth at a reasonable price (GARP), buy growth at a dirt cheap price (GADCP). And then ignore the mark-to-market gyrations along the way. Don't own the market. Don't over-diversity. Not everyone will have the psychological make up to follow such good advice, but more should try.

[KC · Rating 5 out of 5]

Best investing book ever.

[Alexander · Rating 5 out of 5]

Value Investing

This book is the pinnacle of value investing for modern times. Martin Whitman is a legend in the stock market.

[Booky · Rating 4 out of 5]

A good compilation of Whitman's ideas. His magnum opus of sort. Having read his earlier books, you realize this is just an updated combination of earlier material, and some parts with serious repetition. But that doesn't take away from the quality and insightfulness of his work. To the contrary, it gives you an opportunity to truly understand and remember the ideas (altough some parts feel like he's physically hammers it into your head).
I would recommend this to all serious investors and business leaders; just don't make it one of the first finance/investing books you read, you definitely need a higher level of knowledge to truly understand all parts. Even if you've read his earlier works, this will serve as a textbook and reference for Whitman's deep value investing-style.

[Mike Jaksa · Rating 3 out of 5]

More of a textbook. Good tactics and outlines new things to consider before investment decision but did not fit my current needs. Still excited to read Whitman's "Aggressive Conservative Investor" though.