Security Analysis by Benjamin Graham and David Dodd was first published in 1934. It is a fundamental book for serious students of value investing.
Building on Chapter 14's principle about higher standards for straight preferred stocks, the authors list specific standards in this chapter.Mr. Graham and Mr. Dodd emphasize that minimums for earning coverage and stock-value ratio should be higher for preferred stocks. That should account for the contractual inferiority of these securities.
The authors contend that neither form, personal liking of industry, title, and legal terms of the security makes it a better one. It is the track record of the specific security that is important. But, such preferred stocks are rare. Thus, authors favor cumulative preferreds over non-cumulative ones.
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