The latest edition of the classical Value Investing text by Benjamin Graham — Warren Buffett's mentor — is missing nearly eleven chapters.
Introduction
First written by Graham, with the help of his student and co-author David Dodd, Security Analysis introduced a completely new paradigm to the field of finance and is now available in several editions; each of which has its pros and cons.
"At Ben’s memorial service, Dave Dodd, Ben’s co-author, told how he had got involved in the book. It seems that Ben was asked to teach a course at Columbia University on investments and he agreed to do it with the stipulation that he would only do so if someone would take notes. Dave Dodd, a young instructor, volunteered and took copious notes at each of Ben’s lectures. Ben, using the notes, then went ahead and wrote Security Analysis. As Dave said, Ben did the work but he insisted that Dave get credit by being co-author."
Walter J. Schloss, Benjamin Graham and Security Analysis: A Reminiscence (1976) [PDF].
1st Edition (1934)
Pros: Collectible first edition. In print.
Cons: Outdated by Graham's standards.
The preface to this edition describes how the title is somewhat misleading, as the book is far more comprehensive in its approach; addressing concepts and principles of investment as well, and not just the analysis of securities. The preface also mentions approaching fixed-value investments using the Spinozian term "from the viewpoint of calamity".
The contents of this edition are outdated even by the authors' standards. However, this edition is currently in print and has value as a collectible.
"The real secret to investing is that there is no secret to investing. Every important aspect of value investing has been made available to the public many times over, beginning in 1934 with the first edition of Security Analysis."
Seth Klarman, Preface (2008): Security Analysis (by Benjamin Graham).
2nd Edition (1940)
Pros: In print. No co-authors.
Cons: Possibly outdated by Graham's standards.
Graham and Dodd themselves explain the update in their preface to the book as follows.
"The lapse of six years since first publication of this work supplies the excuse, if not the necessity, for the present comprehensive revision ... We have revised our text with a number of objectives in view. There are weaknesses to be corrected and some new judgments to be substituted."
Benjamin Graham and David Dodd, Preface: Security Analysis.
This edition too is currently in print, and was also used as the foundation for the most recently published 6th edition.
3rd Edition (1951)
Pros: Original authors. In print.
Cons: Not the final edition by the original authors. One co-author (Charles Tatham Jr).
This is the last edition written by Graham and Dodd while they were faculty members of Columbia. Incidentally, this is also the last edition written by Graham and Dodd themselves that's currently in print.
This book includes several major changes which are explained in the preface. These include improvements to both the structure of the book, and actual content on common stock analysis and management relations. The content on public utilities is addressed with the collaboration of Charles Tatham Jr.
The preface also advises the investor to rely more on income producing assets than on currency during times of war.
This edition also leaves out the chapter and content on Supervision from the previous editions, and promotes the Margin of Safety to the status of a major investing concept.
4th Edition (1962)
Pros: Final edition by the original authors.
Cons: Not in print. One co-author (Sidney Cottle).
This is the last edition written by Graham and Dodd themselves, and was co-authored with Sidney Cottle. The preface describes this edition as "broadening the portions of the book which deal with trends and growth stocks".
This edition is not currently in print, but is available on Amazon (non-referral link).
5th Edition (1988)
Pros: None.
Cons: Multiple new contributors.
Published 25 years after the last edition, this edition was released after Graham's time; and has updates by Sidney Cottle, Roger F. Murray and Frank E. Block.
In his preface to this edition, David Dodd explains the qualifications of the various contributors. Dodd also mentions how Graham was the original inspiration and advocate for the CFA institute.
6th Edition (2008)
Pros: Foreword by Warren Buffett. Preface by Seth Klarman.
Cons: Outdated by Graham's standards. Eleven missing chapters (available on CD).
Based on the 2nd edition, this book has a foreword by Warren Buffett, a preface by Seth Klarman, and nearly 200 pages of commentary by several other renowned Value Investors.
"My intellectual odyssey ended, however, when I met Ben and Dave, first through their writings and then in person. They laid out a roadmap for investing that I have now been following for 57 years. There's been no reason to look for another."
Warren Buffett, Foreword (2008): Security Analysis (by Benjamin Graham).
Criticism
However, the 6th edition has been severely criticized for omitting nearly eleven chapters; which now need to be accessed online using a CD that comes with the book.
7th Edition (2023)
Pros: Foreword by Warren Buffett. Preface by Seth Klarman.
Cons: Outdated by Graham's standards. Thirteen missing chapters (available online).
This version too is based on the 2nd edition, has the same foreword by Warren Buffett, a new preface by Seth Klarman, and commentary by several other Value Investors.
The official page for the edition by the publisher — McGraw Hill — gives a download link for the online-only content (thirteen chapters as well as the complete Appendix).
"Change is the one constant in the investment world, and for any investment book to pass the test of time, it must hold universal. A successful investment philosophy, such as value investing, must address the challenges in navigating change, remaining flexible in approach and tactics while grounded in basic, unwavering principles."
Seth Klarman, Preface To The Seventh Edition (2023) - The Timeless Wisdom of Graham and Dodd: Security Analysis (by Benjamin Graham).
Recommendations
The 2nd edition is the last version with no involvement from anyone other than the original authors (Graham assisted by Dodd), and is also recommended by Buffett. The 3rd edition is a good alternative for readers who prefer the latest version by the original authors that's currently in print. The 4th edition is ideal for readers who want the final word on the subject by the original authors.
Note: Previous editions of The Intelligent Investor appear to be more faithful to Graham as well.
What Buffett Says
Buffett recommends the 2nd edition of Security Analysis, saying that was the last version with no influence by anyone other than Graham (with Dodd assisting him).