Security Analysis
by and [McGraw-Hill, $5.00]
INEVITABLY the experience of the depression should appear in our investment literature. The authors regard the period from 1927 to 1933 as ’an extreme laboratory test,’ not typical, but useful in supplying the range of possible experience. Just such careful analysis as is here provided should be our greatest safeguard to limit the range of our mistakes and excesses in the future.
This experience makes it possible for the authors to substantiate definitely certain ideas that were only beginning to creep into investment analysis prior to 1929, Take for instance the relative emphasis upon the lien or specific asset security as the basis for bond values on the one hand, and ‘the strength and soundness of the obligor’ as a going business on the other hand. Surely the latter point of view has stood the laboratory test of
experience! Again, what a wealth of sad but enlightening experience we have acquired about real-estate financing, holding-company securities, preferred stocks, and various hybrid types. All this is woven into the discussion.
A feature making for clarity and interest is the extensive use of actual cases of corporate financing, illustrating what might be considered ordinarily as highly technical issues. Wherever possible the authors have tried to organize their material so that practical principles naturally develop for the guidance of the wary investor. Recent legislation affecting the investor, as well as the more important court decisions, has been included. A very serviceable approach to many problems is made by way of analyzing the usual offering circulars of investment houses.
During recent years efforts have been made to standardize several methods of accounting procedure to be followed by corporations whose securities are listed. Eventually this work will do more than much of the present-day preventive legislation to eliminate misunderstandings of the investor. Many of these accounting procedures arr described and illustrated by the authors.
The book is the first substantial contribution to the subject to include the valuable experience of the depression years. For the more or less professional analyst and for those who can afford the time to develop themselves in the art of investment, this book is a worthy and useful tool.
ROBERT H. LOOMIS