An investment in knowledge pays the best interest.To become a successful investor, there are a million things that need to learned and applied over time. One way of learning is to find a good teacher (that's what Warren Buffett did and found Ben Graham) or do the next best thing, which is getting hold of the best books on investment, for beginners, that have the essence of investing wisdom, derived from the personal hands-on experiences of the masters of Wall Street. Besides technique, what most of the books presented further provide, is the right approach or mind-set to investing, while identifying the pitfalls of speculation and the advantages of following sound investment principles.
- Benjamin Franklin
- Benjamin Franklin
Best Books on Investing
Investing is managing money and creating valued assets. For your wealth to grow, money must be wisely invested. There are a range of options to choose from. If you consider all the alternatives, it can be truly overwhelming for a beginner. Thankfully, there are signposts, provided by some of the best books on investment ever written, that can guide you through the maze. Here are reviews of some books, that will help you make sense of the chaotic activity, that investing can be.
The Intelligent Investor by Benjamin GrahamThe intelligent investor is a realist who sells to optimists and buys from pessimists.
Probably the best treatise on investment ever written, this book by value investing guru, Benjamin Graham, has been the bible for most investors for years. Generations have profited from the clear margin-of-safety strategy expounded by Graham. Acknowledged as the best book on investing by Warren Buffet, this is a must read.
Emphasizing the need to be guided by rational logic and safety margins, instead of seductive speculation and emotions, Graham provides a clear stratagem, which can help filter out undervalued stocks that hold high growth potential. Though aimed at beginners, it is a huge tome that takes patient reading and pondering. However, if you digest, comprehend, and fully apply the essential principles of value investing, expounded in the book, you will definitely lose less money in the market, if not make spectacular profits. Graham introduces you to Mr. Market, his quirky nature, and how to deal with him effectively.
One Up On Wall Street by Peter Lynch and John RothchildOnly invest what you could afford to lose without that loss having any effect on your daily life in the foreseeable future.
Beginning with this essential piece of investment advice, this is another classic that explains stock picking in simple terms and presents a shrewd strategy for beginner investors. Backed by the experience of Peter Lynch, one of the most successful investors on Wall Street, this book is recommended reading for every beginner investor.
In the book, Lynch focuses on looking for companies with strong earnings, that have the potential to become tenbaggers (stocks that can grow to ten times their purchase price) and emphasizes investing in businesses that you understand. His style of stock picking, expounded at length in this book, revolves around choosing investments with decent PEG ratios, strong cash flows, good sales, and a capable management. Lynch's folksy style of explaining principles, makes it an easy read, besides being immensely profitable.
Security Analysis by Benjamin Graham and David DoddInvesting is not hard science but a discipline in which both skill and chance play a role.
If you want to deeply understand how to analyze the intrinsic value of securities, 'Security Analysis' is the book for you. It will help you understand the prime factors that need to be scrutinized, while investing in the stock market. It is the hard core theory of value investing, put forward by Benjamin Graham and David Dodd. The authors focus on fleshing out their heuristic value investment approach in quantitative terms, offering a roadmap for investors.
A Random Walk Down Wall Street by Burton MalkielNo scientific evidence has yet been assembled to indicate that the investment performance of professionally managed portfolios as a group has been any better than that of randomly selected portfolios.
A radically different approach to investing, Malkiel's book makes the argument that neither the 'firm-foundation' value investing approach, nor the 'castle-in-the-air' speculative approach can yield good results in the long term as stocks are inherently unpredictable entities, mathematically following a random walk pattern (though if he were to choose, he would favor value investing). He argues that instead of following fundamental or technical analysis, holding stocks from an index fund (like S&P 500) for the long term, provides better results.
Common Stocks and Uncommon Profits by Philip FisherThe wise investor can profit if he can think independently of the crowd and reach the rich answer when the majority of financial opinion is leaning the other way.
Philip Fisher expounds his core investment philosophy in this engaging read, outlining his buy-few-winners-and-hold-long strategy, that has helped millions of investors in taking care of their retirement plans. If Ben Graham focused on the balance sheets, Fisher advised looking more deeply at the management and the future prospects of the products and services offered by the company.
He popularized the scuttlebutt approach to investing, where investors were encouraged to interview people connected with the company for a real perspective of its growth prospects and existing condition. None other than Warren Buffett himself has acknowledged the deep influence of Fisher on his investment strategy, saying that he is 85% Graham and 15% Fisher. Needless to say, this book is highly recommended, for the holistic investment approach it endorses.
Beating the Street by Peter LynchGentlemen who prefer bonds don't know what they are missing.
All else being equal, invest in the company with the fewest color photographs in the annual report.
Never invest in any idea you can't illustrate with a crayon.
Such witty gems abound Lynch's book, written for the investment newbies. The book will enthuse you to pursue stock market investments. His prime focus is in conveying the importance of investing in what you know and understand, and that too on a regular basis. He walks you, step by step, through his own stock-picking strategy.
The Interpretation of Financial Statements by Benjamin Graham and Spencer B. MeredithThe investor who buys securities only when the market price looks cheap on the basis of the company's statements and sells them when they look high on the same bias, probably will not make spectacular profits. But on the other hand, he will probably avoid equally spectacular and more frequent losses. He should have a better-than-average chance of obtaining satisfactory results. And this is the chief objective of intelligent investing.
The third of Benjamin Graham classics, 'The Interpretation of Financial Statements', along with 'Security Analysis' and 'The Intelligent Investor' are your complete guide to value investing. Here, Graham and Meredith explain in detail, how financial statements should be read and understood, as they form the important part of stock research. If you want to learn analyzing stocks in molecular detail, this is the book you should be referring to.
The Little Book of Valuation by Aswath DamodaranA postulate of sound investing is that an investor does not pay more for an asset than it is worth.
One of the foremost authorities on valuation, Aswath Damodaran's book is aimed at advanced investors who want a better grounding in fundamental valuation techniques employed by analysts, before venturing into the stock market arena. Dry, to the point, but packed with solid advice, it is a book that covers the whole gamut of quantitative as well as qualitative factors that go into stock price evaluation. This is a book, which purists will approve of.
The Essays of Warren Buffett: Lessons for Corporate America by Warren BuffettIn my opinion, investment success will not be produced by arcane formulae, computer programs or signals flashed by the price behavior of stocks and markets. Rather an investor will succeed by coupling good business judgment with an ability to insulate his thoughts and behavior from the super-contagious emotions that swirl about the marketplace.
Directly from the master, this is a compendium of select essays from the letters written by Warren Buffett to Berkshire Hathaway shareholders. They contains lessons in money management, value investing, people management, and the art of winning over shareholder confidence. Any one who wants to deeply understand what running a company or managing a portfolio takes, should read, nay, absorb the timeless principles expounded by Buffett in the book.
The Richest Man in Babylon by George Samuel Clason
- Start thy purse to fattening
- Control thy expenditures
- Make thy gold multiply
- Guard thy treasures from loss
- Make of thy dwelling a profitable investment
- Insure a future income
- Increase thy ability to earn
- Too Big to Fail by Andrew Ross Sorkin
- When Genius Failed by Roger Lowenstein
- Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay
- The Total Money Makeover by Dave Ramsey
- The Alchemy of Finance by George Soros
- The Theory of Investment Value by John Burr Williams
- How Markets Fail by John Cassidy
- Common Sense On Mutual Funds by John Bogle
- Strategic Bond Investor by Anthony Crescenzi
- The Money Game by Adam Smith, aka George W. Goodman
- Competitive Strategy by Michael Porter
- Rich Dad Poor Dad by Robert T. Kiyosaki
- Learn to Earn by Peter Lynch
- Investment Philosophies by Aswath Damodaran
- Money Masters of Our Time by John Train
- The Only Three Questions That Count by Ken Fisher
- Stocks For The Long Run by Jeremy Siegel
- How To Make Money In Stocks by William J. O'Neil
- Irrational Exuberance by Robert J. Shiller
- Buffett: The Making of an American Capitalist by Roger Lowenstein
- Reminiscences of a Stock Operator by Edwin Lefèvre
- The Great Crash by John Kenneth Galbraith
- The Black Swan by Nassim Nicholas Taleb
- Martin Zweig's Winning on Wall Street by Martin Zweig and Morrie Goldfischer
- Against the Gods by Peter Bernstein
- The Handbook of Fixed Income Securities by Frank Fabozzi
- Damodaran on Valuation by Aswath Damodaran
- Manias Panics And Crashes by Charles P. Kindleberger
- Barbarians at the Gate by Bryan Burrough and John Helyar
- The Little Book of Behavioural Investing by James Montier