To become proficient at investing you have to work hard. It’s as simple as that. There’s no getting around it. I have found that the best investors read everything that they can get their hands on. They like to turn over the rocks and “peel the onion” so to speak. They read investment (and non-business) books by the handful, scour several newspapers per day and routinely analyze the financial filings of hundreds of companies consistently. Of course, having a good mind helps too – but nothing replaces reading. Even the most successful investors of all time such as Warren Buffet, Peter Lynch and John Bogle were voracious readers. They (or you) should never stop learning!
Folks ask us all the time what are our favorite investment books. We thought that the list below may be of interest to you and/or your children:
One Up On Wall Street – Peter Lynch –
- Written by the Fidelity portfolio manager who managed Fidelity Magellan Fund for nearly a decade and a half. Key theme is “invest in what you know!” Using this principle (investing in what you know and keeping it simple) over the years has kept us out of trouble time and time again!
Stocks For The Long Run – Jeremy Siegel –
- First published in 1994, the book discusses the benefits of long term investing in common stocks. When the markets get rough and you are scared to death, remember Siegel’s in-depth historical market research. This knowledge proves invaluable to help you stay the course.
The Millionaire Next Door – Surprising Secrets of America’s Wealthy – Thomas Stanley and William Danko –
- Great book to help you find financial freedom by putting everything in perspective – by being simple and living a modest, yet satisfying lifestyle. Theme centers around that most folks have less than you think while other low-key, modest-types may have more. Think “stealth is wealth!”
Reminiscences of a Stock Operator – Edwin Lefevre –
- Book was first published in 1923 about legendary investor Jesse Livermore – who made and lost fortunes over the years. One memorable quote includes “… the fruits of your success will be in direct ratio to the honesty and sincerity of your own effort in keeping your own records, doing your own thinking, and reaching your own conclusions.” Read this and you will likely never “day-trade” again!
Extraordinary Popular Delusions and the Madness of Crowds – Charles Mackay –
- An outstanding early study of crowd psychology first published in 1841. The book highlights various financial manias and bubbles and how the general public tends to follow the crowd into “hot stocks” (herding effect) time and time again. Following the general concepts listed in this book led us to avoid technology names before the “tech wreck” around 2000 and the financials during the “financial crisis” in 2007 and 2008.
The Intelligent Investor – The Definitive Book of Value Investing – Benjamin Graham –
- Written in 1949 by Benjamin Graham, the legendary investor and mentor of Warren Buffett. The book can be slow at times – but it’s one of the best all-time books written on investing. We like Graham’s comment “the chief value of the investment advisor is one who shields the client from costly mistakes!”
A Random Walk Down Wall Street – Burton Malkiel –
- Another all-time favorite. The theme of the book is based on the efficient market theory – that investors cannot beat the market averages over longer periods of time (without exposing themselves to incremental risk). The read is topical these days because of the huge foray into stock indexing and the massive use of Exchange-Traded Funds (ETF’s).