Here's a review of what we consider the best investing books to get you started in the stock market. We've read (and re-read) all of them. They've been invaluable in teaching us the basics of investing and the workings of the stock market. In addition, they've helped us develop and refine our investment strategies.
Most of these stock investing books should be available in your Public Library. If you wish to buy them, the paperback versions sell for less than $15 at Amazon.com. Don't let access to these great books be a hurdle for you ..... the return on this investment in learning will be priceless!
From basic stock market investing guides to accounting principles, here are some excellent reads....
The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market by Pat Dorsey.
Pat Dorsey is the Director of Equity Research at Morningstar, Inc. This book is very well written in terms of content, relevance and writing style. Dorsey is a great teacher and has taken a complicated topic like stock investing and made it simple and practical.
This book sets out to answer questions that an individual investor may have like "how to analyze a stock?", "what makes a company great?", what makes a stock cheap?". Dorsey also gives a nice tutorial on the basics of accounting, cash flows, and calculating the intrinsic value of a company.
The second half of this book contains something really unique..... a step by step walk into every industry in the market. Dorsey shows you how to analyze companies within each industry; the specific industry terms and jargon used; which valuation ratios are more important to particular industries; and what you need to know to pick stocks in a particular industry.
You're dying to know what the 5 Rules are, aren't you? Here they are....
Do your homework.
Find economic moats.
Have a margin of safety.
Hold for the long haul.
Know when to sell.
This is undoubtedly one of the best books on investing. If you really want to learn how to fish i.e. invest in the stock market by yourself, independently, this is the book you've been looking for!
Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! by Phil Town
This was one of the first good investment books we read. It's so practical that we were able to start investing as soon as we finished reading it. Well, actually we paper traded for a bit ..... but we put what the book teaches into practice right away.
Phil Town lead a colorful life as a river guide but lived below the poverty line with no clue about finances or investing. In the early ‘80s, Town’s life changed radically. He was guiding trustees from the educational program Outward Bound down the nastiest rapid on the Grand Canyon’s Colorado River, when his split-second decisions saved a boatload of people from a whitewater disaster.
A grateful and financially astute client returned the favor by guiding Town into serious, successful investing using the first rule of investing that Warren Buffett had famously vocalized: Don’t lose money. Within five years, Town had built a borrowed $1,000 into $1 million. His fortunes improved radically, and rapidly, from then on.
Town describes successful methods to pick stocks, calculate their price, and time their purchase and sale — using what he calls "Rule #1".
Towns is a very good motivational speaker, too. His easy to understand, conversational style makes this book a breeze to read. The math involved is explained very well, too.
This book will get you psyched about stock investing. Don't miss out.
Learn to Earn: A Beginner's Guide to the Basics of Investing and Business by Peter Lynch and John Rothchild
Lynch was the former Fidelity Magellan Mutual Fund manager. He has one of best track records among mutual fund managers.
Lynch's main message here is: "find companies that grow their earnings over many years to come. The price of a stock is directly related to a company's earning power"
This book is targeted more toward beginning investors. It covers investment fundamentals and principles — choosing stocks, picking a broker, reading an annual report, etc. Lynch uses stories and parables to drive home his teachings..... An easy to read, interesting starter stock investing book.
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham and Jason Zweig
First published in 1949, this is a classic among stock investing books. Ben Graham was Warren Buffett's mentor. A list of best investing books would not be complete without "The Intelligent Investor".
The core of Graham's philosophy is not profit maximization but loss minimization. This book is best suited for true investors and not traders.
Jason Zweig, senior editor of Money Magazine, has extensively updated the original publication with rich commentary and footnotes. He has done a great job of taking Graham's priceless wisdom and translating it the realities of today's market. This gives us a much better understanding of how to apply Graham's principles.
A word of warning ..... this text might be a little too much for the beginning investor. It might be better understood and appreciated if you read it once you get started with stock investing. But read it you must.
A good quality book can be an indispensable companion on your investing journey. You will find a few of your own gems along the way.... definite keepers for your own "best investing books" collection.
Keep them close at hand, refer to them often. Learn from the powerful experiences of those who've been successful and investing success will come your way,too.
