Benjamin Graham was universally accepted as being the greatest investment advisor of the twentieth century. He promoted the concept of “value investing”, a technique which shields investors from significant error and empowers them to develop long-term strategies. The last line in his book sums up his attitude towards investing: “To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.” Warren Buffett chose this as the greatest investment book of all time, and it has to be said – Warren’s done pretty well for himself.
If you’re new to investing, then this is a great place to start. It is based on the same principle as The Intelligent Investor (above) but written for the new, rather than experienced investor. This means that it’s easy to understand and gives you a great base to build on. It’s also much less ‘dry’ than a lot of investing books. Part of it’s attraction is that it can explain why certain companies consistently outperform others – crucial information for any investor. As well as this, it provides a superb background on the economy and stock market. Start here if you’re new to investing.
This is another book to look at is you are new to investing. Marks identifies all of the Important Things to look for when deciding how to invest your money. Looking at both sides of the equation – how to protect yourself from loss at the same time as finding a good return on your investment, this book takes a lot of simple ideas, and rolls them into a solid strategy based (again) on Value Investing. And as the icing on the cake, it gets another thumbs up from Warren Buffet – “This is that rarity, a useful book.”
The fact that investing is based on risk is not a new concept to anyone. However, Taleb (after spending a significant amount of time doing exactly that) looks at risk in a different way. This is not the same type of investment bible as you’ve seen elsewhere – it’s more of an observation that beating the system isn’t as easy as it’s sometimes made out to be. Risk and probability aren’t predictable, and knowing more about them will help you identify where you want to risk your money, and what the probability is that you’ll get the results you are looking for. He suggests that you keep an open mind about causes, and be ready to change your mind about how to interpret results. Not the easiest of reads, but worth the effort.
This is an investment book wrapped in a philosophical wrapper, but for all that, it contains some nuggets of investing wisdom that are brilliant. This is the ‘Austrian’ take on Value Investing – a slightly different approach. Part of what Spitznagel preaches is about the attitudes of other investors, and how understanding what drives them can lead to a better return for you. His insight provides a different perspective and that alone will give you an edge. A useful explanation of Austrian theory as it relates to capital markets.
Philip Fisher is one of the most influential investors of all time. The investment philosophies that he introduced almost fifty years ago are still regarded by many as gospel. This is another book recommended by Warren Buffet – “I sought out Phil Fisher after reading his Common Stocks and Uncommon Profits. A thorough understanding of the business, obtained by using Phil’s techniques…enables one to make intelligent investment commitments.” Despite his theories being nearly fifty years old, the value in them remains the same – Invest with patience, do your research first, and take a long-term view. At the same time, avoid behavioural pitfalls. This combination will always lead to better returns.
Charles T. Munger was the long-time and media-shy investment partner of Warren Buffet. Not only was he a great investor, but he was a lifelong pursuer of Wisdom, in all it’s forms. This book is a summary of what he learned and lived by in his career. He espoused the idea that success doesn’t come only from genius, but also from avoiding obvious mistakes. Despite sometimes frustrating Buffet, who called him “the abominable no-man”, when he wouldn’t invest in certain opportunities, Munger maintained that success was down to patience and preparation. And the ability to sit on millions until the right investment came along. A wise man, and one worth reading.
If you can find a copy please let me borrow it so I can read it too!
Buffet started from scratch, but since then, his impressive record has given him a cult-like status in the Investing World. This book covers a lot of information about how he got to where he is now. It talks about the development of his business philosophy. And his most important relationships (business and otherwise) and their influence on him. This book was written in 1995 without the help (or the interference) of Buffet, so it’s probably one of the most honest and in depth analyses of Warren Buffet available, and would certainly have been a fully comprehensive review of his life til that point. He is STILL a titan in the Business World. It’s well worth reading about the man who became the second-richest in the world.
It’s a bit of a truism that “If you do what you’ve always done, then you’ll get what you’ve always got”, so innovation is obviously the way to get something else. The trick is to know if what you are doing so differently is going to get you the results that you want. Thorndike gets straight to the heart of the matter by amassing the wisdom of Eight Unconventional CEOs. He analyses what they did (outperform the S&P 500 by a factor of 20), how they did it, and why it worked so well – both from a business point of view, and from the point of view of their investors. He recognised that all of these Outsiders shared specific traits, and thus, so did the companies that they ran. After years of research Thorndyke explains how they did it, and reveals a very different way to do business – for CEO and investor alike.
It’s a bit of a truism that “If you do what you’ve always done, then you’ll get what you’ve always got”, so innovation is obviously the way to get something else. The trick is to know if what you are doing so differently is going to get you the results that you want. Thorndike gets straight to the heart of the matter by amassing the wisdom of Eight Unconventional CEOs.
He analyses what they did (outperform the S&P 500 by a factor of 20), how they did it, and why it worked so well – both from a business point of view, and from the point of view of their investors. He recognised that all of these Outsiders shared specific traits, and thus, so did the companies that they ran. After years of research Thorndyke explains how they did it, and reveals a very different way to do business – for CEO and investor alike.
This is the perfect book for people with minimal or no background in investing – yet it can still add value for experienced investors. It provides the reader with a good understanding of the fundamentals of investing in Stocks and Bonds. Explaining the basics required by every investor – financial statements, analysis, cashflow, income generation, stock price valuation etc. Another good one to start off with, it will explain, in plain English what you need to know before you get involved in the world of Stocks and Bonds. Effectively it manages to break down accounting and financial jargon into layman’s terms, making it much more likely you’ll get it right first time.
OK, so AFTER you’ve read the beginners books (if you are a novice investor) but BEFORE you actually start buying, take a look at Malkiel’s book, it’s a Classic. Easy to read and digest, it uses the dot-com crash as the basis of ‘how not to manage your portfolio’. Offering a life-cycle guide to investing, it gives useful advice to investors from every age bracket. Reading this book will give you a great understanding of how the markets work. This isn’t a ‘Get Rich Quick’ scheme… quite the opposite – Malkiel is renowned for being quite risk-averse. But it’s a great counter-balance for the more adventurous investor and puts the risks into perspective while giving the reader a great understanding of what’s possible, and what’s involved.
This is another book you need to read before you start spending. Schiller (a Nobel Peace prizewinner in 2013) goes into depth about the effects that individuals, institutions and specifically the media can have on the Markets. One of his focuses is the concept of the ‘Market Bubble’, and the problems it can cause. He talks about the influence of Behavioural Economics and puts his case against the ‘Efficient markets’ theory (which is a broadly popular tenet within investment houses). He also gives the reader an in-depth overview of Financial Economics. This is a comprehensive analysis of how the Markets work – and sometimes how – and why – they don’t work the way we expect, at all.
This book is based on Rule #1 from Warren Buffett: “Don’t lose money”. Phil Town was a River Guide, he didn’t want to spend his life looking at facts and figures about Investing – but he wanted to make money from it. Because of this, he came up with a very simple formula upon which he based (and still bases) his investment decisions: “Part is knowing the only five numbers that really count in valuing a potential investment. And part—maybe the most important part—is using the risk-free Rule #1 approach to consistently pay a mere 50 cents to buy a dollar’s worth of a business.” Another great book to read if you’re new to investing.