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10 Books Every Investor Should Read
When it comes to learning about investment, the internet is one of the fastest, most up-to-date ways to make your way through the jungle of information out there. But if youre looking for a historical perspective on investing or a more detailed analysis of a certain topic, there are several classic books on investing that make for great reading. Here we give you a brief overview of our favorite investing books of all time and set you on the path to investing enlightenment. (To find more recommended books, see Investing Books It Pays To Read.)
The Intelligent Investor (1949) by Benjamin Graham
Benjamin Graham is undisputedly the father of value investing. His ideas about security analysis laid the foundation for a generation of investors, including his most famous student, Warren Buffett. Published in 1949, The Intelligent Investor is much more readable than Grahams 1934 work entitled Security Analysis, which is probably the most quoted, but least read, investing book. The Intelligent Investor wont tell you how to pick stocks, but it does teach sound, time-tested principles that every investor can use. Plus, its worth a read based solely on Warren Buffetts testimonial: By far the best book on investing ever written.
Common Stocks And Uncommon Profits (1958) by Philip Fisher
Another pioneer in the world of financial analysis , Philip Fisher has had a major influence on modern investment theory. The basic idea of analyzing a stock based on growth potential is largely attributed to Fisher. Common Stocks And Uncommon Profits teaches investors to analyze the quality of a business and its ability to produce profits. First published in the 1950s, Fishers lessons are just as applicable half a century later.
Stocks For The Long Run (1994) by Jeremy Siegel
A professor at the Wharton School of Business, Jeremy Siegel makes the case for - you guessed it - investing in stocks over the long run. He draws on extensive research over the past two centuries to argue not only that equities surpass all other financial assets when it comes to returns, but also that stock returns are safer and more predictable in the face of the effects of inflation.
Learn To Earn (1995), One Up On Wall Street (1989) or Beating The Street (1994) by Peter Lynch
Peter Lynch came into prominence in the 1980s as the manager of the spectacularly performing Fidelity Magellan Fund. Learn To Earn is aimed at a younger audience and explains many business basics, One Up On Wall Street makes the case for the benefits of self-directed investing, and Beating The Street focuses on how Peter Lynch went about choosing winning stocks (or how he missed them) while running the famed Magellan Fund. All three of Lynchs books follow his common sense approach, which insists that individual investors, if they take the time to do their homework, can perform just as well or even better than the experts.
A Random Walk Down Wall Street (1973) by Burton G. Malkiel
This book popularized the ideas that the stock market is efficient and that its prices follow a random walk. Essentially, this means that you cant beat the market. Thats right - according to Malkiel, no amount of research, whether fundamental or technical, will help you in the least. Like any good academic, Malkiel backs up his argument with piles of research and statistics. It would be an understatement to say that these ideas are controversial, and many consider them just short of blasphemy. But whether you agree with Malkiels ideas or not, it is not a bad idea to take a look at how he arrives at his theories. (For further reading, see What Is Market Efficiency?)
The Essays Of Warren Buffett: Lessons For Corporate America (2001) by Warren Buffett and Lawrence Cunningham
Although Buffett seldom comments on his current holdings, he loves to discuss the principles behind his investments . This book is actually a collection of letters that Buffett wrote to shareholders over the past few decades. Its the definitive work summarizing the techniques of the worlds greatest investor. Another great Buffett book is The Warren Buffett Way by Robert Hagstrom. (For further reading, see Warren Buffett: How He Does It and What Is Warren Buffetts Investing Style?)
How To Make Money In Stocks (2003, 3rd ed.) by William J. ONeil
Bill ONeil is the founder of Investors Business Daily, a national business of financial daily newspapers, and the creator of the CANSLIM system. If you are interested in stock picking, this is a great place to start. Many other books are big on generalities with little substance, but How To Make Money In Stocks doesnt make the same mistake. Reading this book will provide you with a tangible system that you can implement right away in your research.
Rich Dad Poor Dad (1997) by Robert T. Kiyosaki
This book is all about the lessons the rich teach their kids about money, which, according to the author, poor and middle-class parents neglect. Robert Kiyosakis message is simple, but it holds an important financial lesson that may motivate you to start investing : the poor make money by working for it, while the rich make money by having their assets work for them. We cant think of a better financial book to buy for your kids.
Common Sense On Mutual Funds (1999) by John Bogle
John Bogle, founder of the Vanguard Group, is a driving force behind the case for index funds and against actively-managed mutual funds. In this book, he begins with a primer on investment strategy before blasting the mutual fund industry for the exorbitant fees it charges investors. If you own mutual funds, you should read this book. (To learn more, see The Truth Behind Mutual Fund Returns.)
Irrational Exuberance (2000) by Robert J. Shiller
Named after Alan Greenspans infamous 1996 comment on the absurdity of stock market valuations, Shillers book, released in Mar 2000, gives a chilling warning of the dotcom bubbles impending burst. The Yale economist dispels the myth that the market is rational and instead explains it in terms of emotion, herd behavior and speculation. In an ironic twist, Irrational Exuberance was released almost exactly at the peak of the market. (To learn more on this topic, see Understanding Investor Behavior.)
The more you know, the more youll be able to incorporate the advice of some of these experts into your own investment strategy . This reading list will get you started, but it is only a fraction of all the great resources available. Do you have a favorite investing book that weve missed? If so, let us know.
