In this digital age, reading is a neglected hobby, since all the information that you need is readily available online, free of cost. With that said, reading classic books enlightens you in a way that the online articles fail to achieve.
Particularly, if you wish to educate yourself on the complex phenomenon, such as investing money. Educating yourself with some of the pioneering investment books can really teach you the art of making investments. The following includes some of the best investment books of all time.
The Intelligent Investor – Benjamin Graham
‘The Intelligent Investor’, originally published in 1949, includes some of the most astute principles of investing, which are relevant to this day. The book comprises of principles and attitudes relating to long-term investments. It is a comprehensive guide for individuals looking to play the long term but sustainable game in the financial markets. The book discusses investment tips, while also highlighting the most fundamental errors that first-time investors can make.
Benjamin Graham’s ‘The Intelligent Investor’ discusses bonds and stocks, and the scenarios in which they should be invested in. In either of the two cases, Mr Graham believes that both stocks and bonds must be ‘high-grade’ and ‘bought at reasonable prices’. Moreover, the book further covers the five criteria for bull market tops. These include historically high prices, high price-to-earnings (PE) ratios, low dividend yields versus bonds, high levels of margin speculation (borrowing money to buy shares) and high levels of low-quality new issues.
Once you read The Intelligent Investor, you will be able to gauge what kind of investor you really are. Once that becomes clear the book provides in-depth tips on how to invest successfully.
The Intelligent Investor by Benjamin Graham has in excess of 600 pages. Considering this, you will need to dedicate some time in your schedule on a consistent basis to indulge yourself into this book. However, an audible version is also available so you can listen to the audiobooks on the go during your commute, at home, or whenever you feel like it.
One Up on Wall Street – Peter Lynch
Parallel to The Intelligent Investor, ‘One Up on Wall Street’ also offers timeless financial advice. The book, written by Wall Street legend, Peter Lynch, was initially published in 1989. The central idea of the book revolves around the notion that an average individual, without a formal background in investing, has the tools and equipment to make sound investment decisions. Hence, the objective of the book is to bring those tools into conscious awareness, so they can play a significant role in the decision-making process. In fact, on the third page, Peter Lynch writes, “great investors don’t invest in what they don’t understand.”
Keeping this in mind, the book lays emphasis on the importance of investing in areas that can work to your advantage.
Peter Lynch’s One Up on Wall Street discusses three questions:
- Do I own a house?
- Do I need the money?
- Do I have the personal qualities it takes to succeed?
Hence, Peter Lynch talks about investing in a house, before making any other investments. He also elaborates on the significance of only investing money that you are not too attached to. Additionally, the book further elaborates on the personality traits required for you to have if you are considering becoming an investor. The book also elaborates on industries that flourish in certain economic times.
Peter Lynch’s One Up on Wall Street has in excess of 300 pages, which makes it a relatively quick read. This book is recommended to anyone starting their venture of making money on the stock market.
The Little Book of Common Sense Investing – John C. Bogle
If you are looking to read something recently published, then you should consider reading The Little Book of Common Sense Investing by John C. Bogle. This masterpiece was published in 2017 by Wiley Publishers.
In the book, John Bogle, the founder and retired CEO of Vanguard, discusses the simple art of investing in low-cost index funds. The main theme revolves around the idea of making smart investments while reducing the need for a middleman. The first chapter of the book features a parable of Warren Buffett’s classic tale of the ‘Gotrocks and the Helpers’, which is applied later on.
Additionally, throughout the publication, John C. Bogle pays homage to Benjamin Graham, by integrating some of his most relevant quotes in the writing.
All in all, The Little Book of Common Sense Investing precisely defined the basics of making the low-risks investment. It does not cover the complex areas of how to beat the stock market, rather it discusses clear ways on how you can align yourself with the market, without having to spend a lot of time and energy. Hence, John Bogle’s work is recommended for individuals who are just starting out in the investment market.
The Little Book of Common Sense Investing by John C. Bogle features eighteen chapters. The first edition features in excess of 200 pages, whereas the following edition includes 300+ pages. This suggests that the book itself would not take much of your time.
Security Analysis: Principles and Technique – Benjamin Graham / David L. Dodd
Another masterpiece of Benjamin Graham is his collaborative work with David L. Dodd, known as, “Security Analysis: Principles and Technique”. This piece is known to have pioneered the foundation for value investment.
The book comprises of comprehensive advice, concerning the margin of safety, when making an investment. Similar to the previous work of Benjamin Graham, the advice, featured in the work, is timeless.
Security Analysis: Principles and Technique by Benjamin Graham and David L. Dodd, gained mass popularity, not only because it offers sage advice, but also because the author survived the Great Depression. In fact, this is one of the most record-breaking investment books out there.
The book offers the audience with clear and in-depth instructions regarding the different approaches to investment, conducting common stock analysis, along with financial statement analysis, and fixed-income securities.
Now, the book has several editions, with amendments made by some of the modern investment authors. Therefore, dedicate your time to reading any version that you feel is right for you.
The Security Analysis: Principles and Technique book has around 700-800 pages; however, these may vary depending on the edition. While the book is slightly more detailed, it is can provide exceptional insight into making sound and smart investment.
If you wish to gain a comprehensive understanding of the work, it is recommended to read this book, along with The Intelligent Investor.
The Essays of Warren Buffett – Lawrence Cunningham
The Essays of Warren Buffet by Lawrence Cunningham is truly a work of art. This masterpiece features a combination of Warren Buffer’s astute essays, along with the insight offered by Mr Cunningham.
Warren Buffet was one of the most influential investors of recent history, who wrote with honesty, transparency and genuineness. His work does not only feature numbers and analysis but rather it also shines a light on his opinions, expectations and train of thoughts.
The book is divided into two sections, the prologue (featuring Warren Buffett’s work) and an epilogue (including the work of Lawrence Cunningham). Overall, it discusses seven key points including corporate governance, corporate finance and investing, common stock, accounting policy and tax matters, accounting and valuation, alternatives to common stock, along with mergers and acquisitions.
The Essays of Warren Buffet by Lawrence Cunningham is perfect for investors with a medium level of experience. It offers simple and easy to read philosophies, however, it may be slightly complicated for fresh individuals entering the investment field.
The book includes detailed advice in each chapter, that you can ruminate on before starting the next chapter. The most recent edition of the book has in excess of 300 pages, thus making it a light and breezy read.
Common Stocks and Uncommon Profits – Philip Fisher
Originally published in 1958, Common Stocks and Uncommon Profits by Philip Fisher is an ageless investment guide. Phillip Fisher was one of the most influential investors of all time. In fact, Warren Buffett was also inspired by his work.
Mr Fisher executed his first investment in 1928, after dropping out from Stanford Business School to pursue a career as a Securities Analyst. Later, he launched his own firm and developed an interest in growth stocks. According to Philip Fisher, any individual should invest in high-quality growth stocks to avail long-term profits.
This advice is mirrored in his writing. Common Stocks and Uncommon Profits by Philip Fisher provides in-depth advice on the basic principles of growth investments. Throughout the book, you will get comprehensive advice on what type of stocks you should invest in, along with the time frame in which you should make the investments. The book also talks about the right time to sell your stocks, to attain a long-term profit.
One of the greatest highlights of Common Stocks and Uncommon Profits is the fifteen-point list, created by Philip Fisher, to research common stocks, prior to making an investment. These precious points can still be used today when making an investing decision. Essentially, the subsequent chapter discusses that selling your socks shouldn’t even be an option if the selected company demonstrates successful results in its operations.
Common Stocks and Uncommon Profits is definitely worth the read!
Principles – Ray Dalio
Principles by Ray Dalio is not a typical investment book. Instead of focusing on the analytical side, the author discusses the key principles that he follows in life and work, which ultimately results in success. Essentially, as the book was published in 2017, its philosophy is relatable and can be applied to the modern way of living.
Ray Dalio, the founder of Bridgewater, the world’s largest hedge fund, provides an insightful account on achieving your goals. The principles stated in the book can be applied to investing as well. The cardinal theme followed in Principles is having conscious awareness of what you want, and making changes in your life, personality and actions, to achieve that goal.
The book is segregated into three divisions the first domain discusses the initiation of Ray Dalio’s career, whereas the second part talks about his approach to life and the difficulties he faces in his daily living. The book comprehensively covers the way in which Ray Dalio works through his complications to ensure success in every area of life. Lastly, the third part comprises of Work Principles, which are engineered around the notion of an Idea Meritocracy.
On the whole, Principles discusses the general philosophy of which you must lead your life by. The book teaches ways through which you can remain focused towards your goal, while remaining practical, genuine, and by working through the difficult moments.
If you are thinking about investing, you must read this book first, as it can open up your mind, and mentally prepare you for the emotional roller coaster, that is investing.
Beating the Street – Peter Lynch
Another one of Peter Lynch’s classic – Beating the Street. This book is a combination of Mr Lynch’s biography and a reference to his work. Originally published in 1993, the book discusses the different ways in which the legendary Peter Lynch beat the market, on a consistent basis.
Reading Beating the Street is essential if you wish to educate yourself on the different ways in which the manager of a large-scale mutual fund carry out their operations. According to Mr Lynch, these managers are integrated into the market, as they are rewarded in the short-term and a majority of their monetary funds are invested in the market. Hence, experiencing the fluctuations in profit and loss becomes a norm for them.
In Beating the Street, Peter Lynch discusses his own investment experience. Some of his patterns include searching for stocks, which are priced at or below its earnings growth rate. He further lays emphasis on choosing businesses that have a promising future, while not being as attractive to Wall Street investors. Generally, he focuses on comprehensively researching all his prospects before making an investment decision.
The book strengthens his idea that any individual can invest if they have enough knowledge. Therefore, this book stresses the significance of conducting your own detailed research, taking risks, remaining patient, and enjoying a long-term reward from your investment. Reading Beating the Street is essential, as it can shape your thoughts about the importance of research in investing.
The Richest Man in Babylon – George Samuel Clason
The Richest Man in Babylon by George Samuel Clason is a brief self-help book, originally published in 1929. If you are not a fan of reading analytical and factual books, this guide is perfect for you.
The Richest Man in Babylon includes a series of short stories, that offer a valuable lesson in finance. Its content is directed at individuals who desire to achieve financial success.
The general theme of the stories revolves around the idea that hard work and reflection on past mistakes can bring in more wealth in the future. The book features lessons that discuss the basic rules of effectively managing your money.
As the title suggests, the main lesson from the book is extracted from the parable of Arkad, who promulgated himself to be the richest person in Babylon. Following his announcement, the King requested Arkad to enlighten the society with his seven secrets that led him towards financial success. These principles include consistently saving a portion of your income, spending wisely, regularly making small investments to benefit from the interest rate, avoiding risks that lead to losses, make payments (to build equity) instead of renting, planning for the future and lastly, improving your skills to increase your income.
If you struggle with money management, which is preventing you from investing proficiently, reading The Richest Man in Babylon by George Samuel Clason is highly recommended. The book has less than 150 pages which makes it a quick read.
Learn to Earn – Peter Lynch
Another one of Peter Lynch’s classics is Learn to Earn, which is co-authored by John Rothchild. This book is a beginner’s guide to the basic principles of investing.
Peter Lynch’s Learn to Earn is perfect for any individual who lacks even the slightest idea about investing or the stock market. This is because the book features a stripped-down version of what the entire process is. In fact, the first chapter discusses the development of business and stock investing in the United States. With this information, you can truly educate yourself on how investing works.
The subsequent chapter discusses the fundamentals of investing. It talks about starting low, and gradually building your way up. It also discusses the different areas of making an investment when you are starting out.
In the third chapter, Peter Lynch elaborates on the lifecycle of the company, thus allowing you to gauge an idea of what type of companies are the healthier options for making an investment. The fourth chapter concludes by stating that the leaders of the company, along with her effective decision-making abilities, play an influential role in the company’s success.
If you have zero ideas about investments, reading Peter Lynch’s Learn to Earn can be enlightening for you!
The books mentioned above are written by the ‘gurus’ of their industry. By reading and incorporating them in your life, you can fast track progress. Remember, books provide principles, roadmap or guidelines. They are only as effective as the actions that the reader takes to implement those steps in their life.