Graham gave up on security analysis at the end of his life

He was involved in merger arbitrage, not takeovers. The few times Buffet did take control over managing companies was out of necessity rather than by choice (i.e. the management had huge problems, he was the major shareholder so he had to do something). He was rather reluctant in doing this and weren’t very good at it either. Most of his other investment, although he purchased majority or 100% share, he leave the management team to run things on their own.

If I’m not mistaken, Buffet does not believe in diversification. There were many times in his investing career that a single holding represented a significant portion of his portfolio.

> “I am no longer an advocate of elaborate > techniques of security analysis in order to find > superior value opportunities.” Why would you use elaborate techniques when you can just use common sense.

Opportunities will always exist if you are flexible with your size and scope. If you only look at mega-caps, tech companies, domestic companies, stocks, bonds, etc, you will find bear markets in all these subdivisions which will make for frustrating periods of investing. While Jim Cramer pretty much only ever looks at domestic large and mid cap equities in practice, he’s right when he says “there’s always a bull market somewhere.” Also, within a broad context, investing such as PE and activist will probably always be profitable due to the information asymmetries that exist – you know what changes you will make to unlock value at the firm you’re buying, and the seller doesn’t. Problems can still occur when you’re reliant on credit markets to feed an irrational buying binge and forget about the price you’re paying.

http://www.forbes.com/forbes/2010/0927/finance-david-dreman-fixed-income-watch-debunking-beta.html “The New Testament of investing is actually a return to the Old Testament. I’m talking about Ben Graham and David Dodd’s Security Analysis, first published in 1934. They warned investors to stay away from excess leverage, illiquidity and other risks that CAPM ignores. They recommended buying firms with strong, identifiable earning power and stressed the importance of stockholder dividends.”