The stock market was down pretty much across the board last week, but overall things have been going quite well on the various exchanges. The Dow Jones Industrial Average, The NASDAQ, and S&P 500 are all very near record highs. Obviously this is a good sign that the economy is on an upswing, and hopefully the bull market will continue to run. Although I think we very well could get a pullback with earnings season coming up, and the whole “sell in May and go away” mindset of some, things are at least good for the moment.
Since things have been so good, and the financial collapse in 2008 is becoming a distant memory for most, a lot of retail investors have been diving back in. Investing money and having money work for you, as opposed to you working for money is a tried and true way to become wealthy. If you’re new to this concept, and new to investing in the stock market, where do you start?
There are some good free websites (which I’ll get to in another post) out there that contain good information, but for me, nothing beats a real, physical, book. That’s why I’ve created a list of the top 10 books on investing that everyone interested in a brighter financial future should read.
The Intelligent Investor
This is perhaps the most important and influential book ever written about value investing. Originally published in 1934 by Ben Graham, this work has been heralded by one of the greatest investors of all time, Warren Buffett as “the best investing book ever written”. In it, Graham presents two types of investing styles – one for every day people who don’t want to think about their portfolios (“defensive”) and the business man or woman who wants to enjoy maximum returns (“enterprising”).
Security Analysis was originally written by Professor Benjamin Graham in 1934. Five editions and a million copies later, the seven hundred page guide to investing will teach you how to analyze and value almost any investment. If you take more than a casual interest in building your net worth, this book could very well change your life.
How to Make Money in Stocks: Complete Investing System
Bill O’Neil is the founder of Investor’s Business Daily, a national financial daily newspaper, and the creator of the CANSLIM system. If you are interested in individual stock picking, this is the place to start. Many other books are big on generalities with little substance, but How To Make Money In Stocks doesn’t make the same mistake. Reading this book will provide you with a tangible system that you can implement right away in your research.
A Random Walk Down Wall Street
This book popularized the ideas that the stock market is efficient and that its prices follow a random walk. Essentially, this means that you can’t beat the market. That’s right – according to Malkiel, no amount of research, fundamental or technical, will help you beat the street. 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 Malkiel’s ideas or not, it is not a bad idea to take a look at how he arrives at his theories.
One Up On Wall Street
In One Up On Wall Street, Peter Lynch makes a very persuasive case that the individual investor can do very well by buying great companies for the long term. He even opens the book by saying that “any normal person using the customary three percent of the brain can pick stocks just as well as, if not better than, the average Wall Street analyst.” Lynch then goes on to show just how the ordinary investor can do this. This book is engaging, entertaining, and definitely worth a look.
Beating The Street
Like the previous book, this is also authored by famed investor Peter Lynch. Peter Lynch’s “invest in what you know” strategy has made him a household name with investors both big and small.
An important key to investing, Lynch says, is to remember that stocks are not lottery tickets. There’s a company behind every stock and a reason companies — and their stocks — perform the way they do. In this book, newly revised and updated for the paperback edition, Peter Lynch shows you how you can become an expert in a company and how you can build a profitable investment portfolio, based on your own insights and experience and on straightforward do-it-yourself research. This book will show you how and why there’s no reason why the individual investor can’t invest like the experts do.
Learn To Earn
The Richest Man In Babylon
The Richest Man in Babylon is a terrific collection of stories written in the early part of the 20th century by George Clason.
The book has become an inspirational classic to millions of readers despite being set thousands of years ago in the historical city of Babylon. The stories, and most importantly, the principles, seem just as applicable today as they did in ancient times. There are tales of how Arkad, the richest man of Babylon, achieved his wealth as well as tales of slaves buying their freedom and achieving their own wealth. The primary principles of paying yourself first and living within your means are described so well that its hard to imagine anyone reading the book and having difficulty understanding what they need to do to improve their finances.
Common Stocks And Uncommon Profits
Philip Fisher and his investment philosophies, introduced almost forty years ago, are not only studied and applied by today’s financiers and investors, but are also regarded by many as gospel. This book is invaluable reading and has been since it was first published in 1958. In this book, Fisher outlines his famous, “Fifteen Points to Look for in a Common Stock.”
Famed investor Warren Buffet had this to say – “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.”
Your Money And Your Brain
Why do smart people do dumb things? Jason Zweig, who writes for The Wall Street Journal, tries to answer that question, particularly in regard to investing. Your Money And Your Brain is an excellent introduction to the emerging field of neuro-economics. Perhaps best of all, it shows how investors can improve their financial performance by having a better understanding of the brain.