Security Analysis by Benjamin Graham and David Dodd was first published in 1934. It is a fundamental book for serious students of value investing.
In this chapter, Mr. Graham and Mr. Dodd define various security types.The authors lay out the conventional security classification - Stocks, and Bonds -, its typical connotations and point out various flaws with examples. A bond could be as risky as a stock. There are cases where a stock could be a safer investment than a bond. In addition, various flavors of stocks and bonds don't necessarily fit the typical classification as understood by the general public.
Thus, they propose a new classification that is more practical in nature. As such securities could be either Fixed value investments, Senior securities with variable payouts, and Common stocks.
This chapter concludes Part I of the book in which Mr. Graham and Mr. Dodd laid out basic concepts pertinent to intrinsic value, investments, Analysis, sources for studying securities, and their classification.
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