Top 3 Investing Books for Beginners

Where does a beginner or prospective investor armed with determination but lacking technical information wishing to get into investing start?  Well, this is one of the biggest problems that many people have to face when considering investing because they do not know the basic information besides what is available in blogs and forums.  If you want to be a serious investor, you need a serious guide that will turn you from a novice to a pro.  In my opinion, the top 3 investing books written by experienced investors you absolutely have to check out are:

Learn to Earn: A Beginner’s Guide to the Basics of Investing and Business by Peter Lynch & John Rothchild

s7056484If you are the kind of person who likes to be thorough in what you read, this beginner’s guide that covers the principles of investing in light of the modern economy may be the perfect investing book to use as a guide.  According to Lynch and Rothchild, our education system failed us because we are not taught the basics of the economic system and especially how to navigate the stock market, and this is why they came up with this simplified handbook.

This book is written for the younger investors and is considered a primer that is both entertaining and enlightening for persons of a high school age or older but even if you have experience in business, I guarantee you there’s something you will learn you’ll be surprised you didn’t know.

The Intelligent Investor by Benjamin Graham

Benjamin_Graham_-_The_Intelligent_Investor_-_The_Definitive_Book_on_Value_InvestingFirst published in 1949, The Intelligent Investor: The Definitive Book on Value Investing is a critically acclaimed investing book that introduced a new approached called value investing, something that played a significant role in shaping investing over the past 60 years.  Benjamin Graham is an acclaimed author and one of the greatest investment advisors of the 20th century and his book is a guide you can use to protect yourself from common and uncommon mistakes and therefore shield yourself from the losses resulting from these errors.

Something else you should know about this edition of the book: the preface is written by Warren Buffet and a comprehensive introduction that elaborates what you should expect in and from the book is a perfect appetizer to get you in the right state of mind.

Extraordinary Popular Delusions and The Madness of Crowds by Charles MacKay

extraordinary-popular-delusions-madness-crowds-charles-mackay-paperback-cover-artThe Extraordinary and Popular Delusions and the Madness of Crowds is another classic book that most successful investors say is worth reading twice or more times.  You will get an illuminating and entertaining view of the most popular swindles of all times such as “The South-Sea Bubble”, “Tulipomania” and “The Mississippi Scheme” and how they were the most effective investments at that time.

The book teaches you to become an investor in person and not just try being one.  If you are capable of coming up with an investment idea, this book will show you how to not be one in the crowds that have taken madness and confusion to whole new limits – jumping senselessly into speculated frenzies because of greed and how you can actually benefit off this group of people.

Review of The Essays of Warren Buffett: Lessons for Corporate America by Warren Buffett and Lawrence Cunningham

the-essays-of-warren-buffet_600x450Warren Buffet is a straight up old-school ‘what you see is what you get’ kind of businessman.  Even when he writes to his shareholders, unlike most corporate bigwigs who use big words in a few sentence of a newsletter, Warren writes about the numbers in the annual report as well as about himself, what he thinks and what he expects.  In this book, which is an amalgamation of the best of his writings by Lawrence Cunningham, you will get to read everything that the Berkshire Hathaway shareholders read from Warren between 1979 and 2011.  You should expect to read investment strategies he came up with, some of the best business practices his company used and tons of free advice suitable even for first time entrepreneurs.

If I were to give you one solid reason to read this book it would be because I find Warren Buffet a very funny and a very wise man, everything he writes is important.  I didn’t know much about Cunningham before I read this book but I understand that he is not only the editor of the book but a partner who contributed a great portion of it.  Over the years I have read a wide range of business books, journals and reports but this one is fascinating because they weren’t written for a book reader – they are important official letters to other successful investors and the author is one of the most articulate and outspoken entrepreneurs in the world.

Cunningham’s major role was organizing the essays and putting them in sections between the prologue (P. 27 & 28) written by Warren and epilogue (P. 274 – 282) written by himself.  The book is organized into 7 sections namely:

1. Corporate Governance
2. Corporate Finance and Investing
3. Alternatives to Common Stock
4. Common Stock
5. Mergers and Acquisitions
6. Accounting and Valuation
7. Accounting Policy and Tax Matters

xBL02_IW_WARREN_BUFF_797540f.jpg.pagespeed.ic.Y_VGKTxusaIn the prologue section, Warren explains that the Berkshire Hathaway shareholders group are contacted directly by him or as he puts it “the fellow you are paying to make sure business is running”.  He clearly demonstrates how positive energy and dedication combined with his natural leadership skills and management principles gets you what you want, where you want and when you want it.  He explains in great detail what he has learnt over the years and with a great sense of humor includes tons of personal experiences and observations about the American investment market, its culture and economy and the most notable ups and downs of the last 25 to 30 years.

If you are the kind of reader who prefers to extract little information from a book and apply it before coming back for a new dose, then the essays of Warren Buffett is the perfect book for you because you can choose to read one letter in a few minutes and digest it for the rest of the day instead of waddling through fluff in a book and find your first point at the end of the chapter.  The book is easily written but novices may find it a little difficult to keep the pace, this is perfect for intermediate investors.

Money Masters of Our Time by John Train

9780887309700_p0_v1_s260x420First off, I will confess that there isn’t another book with a catchier title than ‘ Money Masters of our time ’.  John Train is the reviewer of reviewers and in this book he compiles brief profiles of about 17 greatest investors and money managers between the 80s and 90s, some of the very popular, successful and renowned but others may not be so familiar to everyone.  Most of the profiles in this book in my opinion are very well compiled and written, with very useful information about their investment policies, strategies and money management styles but there are about two or three that I felt didn’t earn a place in such an illustrated literature material.

In this compilation, John Train brings profiles Jimmy Rogers, Warren Buffett, Michael Steinhardt, Peter Lynch, Phil Caret, Julian Robertson, Ben Graham, Paul Cabot, John Templeton, Robert Wilson, Richard Rainwater, John Neff, Mark Lightbrown, Ralph Wanger and George Soros and goes to great lengths to bring out the real investors in them.  As you can see, on this list are value investors, short-sellers, international players, growth investors and commodity experts and each of them will provide you with solid insights as well as knowledge in a summarized and simplified approach.

The Author, John Train, is the founder of the Train Smith Investment Counsel but he is probably known by most as the former head of the Lampoon or the Signet Society.  He founded and was the first MD of The Paris Review and has written quite a number of great business books including Investing and Managing Trusts Under the New Prudent Investor Rule: A Guide for Trustees, Investment Advisors, & Lawyers; The Midas Touch: The Strategies That Have Made Warren Buffett “America’s Preeminent Investor”; Dance of the Money Bees: A Professional Speaks Frankly on Investing and The Craft of Investing among others.

They say that experience is the best teacher, but it can be better if you are learning from the experiences of others, especially those who overcame the natural and societal holdbacks and made it big.  Their knowledge, strategies and inspiration is wisdom to others, and what better way to learn than from multiple success stories?  This book profiles the 17 great people in our world of business and tells of their lives, how they got into business, their paths of investments, their trials and errors, their thoughts and approaches to new opportunities and the best lessons you can learn from each.

For instance, when he talks of Warren Buffet, he epitomizes the man as an unequivocal living legend with significant volumes already written about his personality and professional life.  He puts emphasis on Warren’s approach to business and how he uses a deep and wide moat approach to escape competition while creating differentiation and how he perfected the principle of ‘buy a great business at a great price, then make it greater’.  He quotes Warren’s use of humorous (though dry) choice of words and phrases like “A horse that can count to ten is a remarkable horse – not a remarkable mathematician” but if you know the man you will identify easily with the writing style.

Irrational Exuberance by Robert J. Shiller

51BSEYyKW2LAs much as the world likes to see the market as a rational and very efficient machine, one Yale economist strives to show us otherwise, in line with the British Economist John Maynard Keynes’ famous quote “The market remains irrational longer than you remain solvent”.  The first edition of the book irrational exuberance was released at the perfect time – just when the dot com fever was at high pitch and this book, many claimed, really helped those who embraced technology to do business then.  If it was useful for many back when the internet and modern communication and business techniques were just for nerds, how much do you think it will help you if you read it now?

The author, Robert James “Bob” Shiller is not only a renowned American economist but also a best-selling author and an academic who studied and has served in Yale University, Yale School of Management and the Yale International Center for Finance.  He has also been a research associate at the National Bureau of Economic Research, president of Eastern Economic Association and Vice President of the American Economic Association in back 2005.  Besides Irrational Exuberance, Robert has also written a number of investment books including ‘Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism’ with George A. Akerlof, ‘The Subprime Solution: How Today’s Global Financial Crisis Happened’, and ‘What to Do about It, Finance and the Good Society and The New Financial Order: Risk in the 21st Century’ just to name the most popular.

The first edition of Irrational Exuberance was such a huge success because it offered a wide range of historical evidence and published research in the context of the stock market and how it relates with the market of today.  Although it seems to have no specific focus point, the book brings forth concrete suggestions on the policy changes that are already in place and those that must be made in response to market conditions.  The book argues that an economic boom such as that of the stock market boom of between 1982 and 1995 is speculative and not based on any sensible economic fundamentals, hence considering its structural factors will enable you to see such an opportunity from a distance, and benefit from it even before everyone else realizes.

robert-shillerThis book introduces 12 essential factors that are the ultimate causes of an economic boom including naturally occurring Ponzi processes, Amplification mechanisms that amplify the effects of precipitating factors, cultural factors and the effects of the market by the news media and the ‘new era’ of thinking.  The book further discusses psychological factors of the masses, psychological anchors in the market and the ‘herd’ behavior.  The book is subdivided into five parts, but of greater interest is the fifth part which tries to rationalize exuberance and teach efficient markets theory among other theories that investors like you are learning.

In this book, Robert believes that the market is grossly overvalued and the baby boom effect, media interest and the public infatuation with the internet all conspired to amplify the baby boom effect.  It is definitely worth checking it out.

Top 3 Best Investing Books (Written by Real Experts)

all the books about investing

To be honest, most books that talk about invest out there have very little value to you, knowing which books are of substance and are worth reading is often among the very first noticeable traits of a born investor.  Investing is as complicated as it could especially at this time and most books are written purely for ego, publicity or to get money, not to add value to the reader.  I know of a number of amazing books though, if you are looking for something that will change how you do business, here are the top 3 you should start with.

Martin Zweig’s Winning on Wall Street by Martin Zweig

If you are an advanced investor, this is the right book for you.  Before you can fully take advantage of the insights from Martin Zweig’s best seller, you will need to have experience in stock analysis and basically everything to do with investment.  Although this book advocates for a very unorthodox approach to stock pilings, most people who testament to using this book to turn their lives around say it is effective and reliable.

Zweig expresses his enthusiasm and intricacies of the ‘technical’ approach to the stock markets and clearly details most essential elements that affect a modern investment including market momentum, the Federal Reserve policy, debt volume, interest rates, market trends and deb volume among others.

Beating the Street by Peter Lynch

Do you know who Peter Lynch is?  If you don’t he is the former manager of the Fidelity Magellan mutual fund who got very famous in the bull market rally back in the 80s and best mutual fund manager to date.  His book, ‘Beating the Street’ is recommended for beginner and intermediate investors as it is his life story – a story depicted from the hardship, struggle, hope, risks and investments angles.

Lynch’s easy to understand writing style makes this book one of the most widely read and used and the many strategies and growth through investment makes it a fantastic book for those who have ideas but lack a roadmap.

The Art of Short Selling by Kathryn F. Staley

The Art of Short Selling, as the name of the book implies, is turning investing into an art – and loving the thrill, the profits, the ease, the chase, the catch and the fun that they come with.  This book is meant for intermediate investors as it is more of an accounting book than an investment book, it therefore seeks to perfect your skills by making handling finances the most fun part of your business.

In this book, you will get to learn and apply the concepts of accounting to investing.  I would recommend this book as a guide to streamlining the accounting part of investing and the best literature on how to master financial investing for those that get inspired tomorrow by profits from today from a real expert who has worked with brokerage firms and hedge funds and other financial institutions.

A great video to start with