As you learn to invest, one of the best strategies for making rapid progress is to learn from the masters. Rather than repeating the same old mistakes of new investors, it helps – and saves money – to acquire the insight and wisdom of the experts. For the price of a book, you could save thousands of dollars by making smart investment decisions and avoiding silly decisions.
Below are seven of the best investing books ever published. They have stood the test of time and continue to reward new readers with the wisdom of the masters of investing.
Ben Graham’s The Intelligent Investor is like a shorter, more readable version of Graham’s other famous book Security Analysis (co-authored with David Dodd.) Graham is considered the father of value investing, a style of investment where practitioners are looking to buy $ 1 for $ 0.75 or less, and he was a key mentor to legendary investor Warren Buffett. Here Graham shows you how to think wisely about investing and how to avoid the mistakes of so many inexperienced investors.
Graham also introduces a character called Mr. Market – a metaphor for the schizophrenic market, which offers stocks low one day and high the next. This book has many versions from decades past, but recent editions with publisher Jason Zweig offer modern commentaries that offer a perspective on more contemporary events.
This book by Joel Greenblatt is a modern classic and shows how to find actions hidden by superficial events, such as fallout. He has become a relatively quick favorite with current investors due to his easy-to-read style, practical examples, and humor. Yes, humor! In its inimitable prose, Greenblatt gives you all the details to discover these hidden gems.
For example, using the book’s approach, readers could have followed PayPal, before it parted ways with parent company eBay in 2015, and then returned 400% to investors over the next five years.
This classic investing book is another focused on practical examples that show readers how to find attractive stocks that could pay them really huge returns. Author Philip Fisher is an investment giant, and he has dropped many of his secrets in this book, including the qualities to look for in an attractive business. First written in 1958, this volume still provides so much wisdom that contemporary readers continue to cite Fisher’s work today. One of Fisher’s classic techniques is called the scuttlebutt method, in which he advises investors to see what a company’s competitors are saying about it, in order to assess the company’s competitive position.
It’s also worth noting that Warren Buffett says his own approach to investing is a combination of Ben Graham’s and Fisher’s – it’s hard to get more praise than that!
Beating the Street is another gem, and it shows in plain English (and pragmatic style) how to pick winning stocks. It’s from Peter Lynch, the long-time fund manager of Fidelity’s Magellan Fund, and one of the world’s most trusted investors. Lynch introduces you to some of his own investments in the fund and shows you where he has succeeded and even where he has failed, with a sort of egoless good humor that feels rare on Wall Street.
This book follows on from Lynch’s One Up on Wall Street bestseller and shows you how to use your day-to-day experience to find winning stocks. For example, if you see friends starting to buy a new product, its producer might be an attractive stock buy, and this approach has been called the Lynch Method of Finding Stock.
Seth Klarman’s Margin of Safety is something of a legend in the investment book world. Klarman, now a multi-billionaire, published the book in 1991, and it has remained a holy grail ever since. This is because the book is rare – it has never been reprinted and sellers regularly ask for over $ 1,000 a copy. The book details Klarman’s prudent, value-based investment approach, using the margin of safety principle. That is, he advises you to buy an asset at such a low price compared to its likely value that it would be difficult to lose money.
If you are looking to invest in real estate in the public stock market then you will want to read Investing in REITs from Ralph Block. REITs are real estate investment trusts and are among the most popular types of stocks due to their generally high dividends and attractive long-term returns. This book is very popular among REIT investors and those new to the field, and is already in its fourth edition, after it was first published in 1998. Block distils its decades of REIT investing into the key qualities you must search the area.
The Outsiders is a fantastic read, even if you are only somewhat interested in investing. That’s because author William Thorndike tells the stories of eight unconventional CEOs who go against the grain and create exceptional returns for their shareholders. It is about how rational decision-making – despite conventional wisdom – leads to great results. It’s the newest book here, but it is perhaps the most appealing to readers of all kinds because of its style. Although it sits at the end of this list, it may be the best book to start with if you are learning to invest.
At the end of the line
Reading about investing is one of the most profitable things you can do. Not only can you learn how to approach investing smartly from some of the world’s best investors of all time, but you can also avoid some of the pitfalls that can put you down early in your journey. As Warren Buffett said, “Rule # 1 is never to lose money. Rule # 2 is to never forget rule # 1.