Here are some books that will make a real difference to anyone learning how to invest. They won’t turn you into an instant millionaire, but with the right knowledge and attitudes, anything is possible.
The Intelligent Investor – by Benjamin Graham
Mention Warren Buffett, a man who really knows how to invest, and everyone knows’s who you mean. Not only one of the world’s wealthiest men, but a trailblazing expert on the subject of investing.
Mention Benjamin Graham, on the other hand, and you will most likely get a resounding “who?” But without his book “The Intelligent Investor” Warren Buffett may have found it difficult to get his investing ‘mojo’ really humming. This is the book that is credited with showing Buffett how to invest.
As the undisputed father of value investing, Graham’s book provides a myriad of valuable lesson’s for any long-term investor. And not only will you learn how to invest, but also the why, when and where.
Unfortunately, I can’t promise that reading the book will be an instant path to ‘Buffettesque’ wealth. I can, however, say it gives you some fantastic insights into how to invest and particularly the art of value investing.
It is a must-read for all those looking to build long term investment portfolio’s.
Now, I have long been a fan of share market history. Over the years I have read a great deal on all sorts of market rallies and crashes.
In fact, back during the 2000 tech bubble, I often showed my clients a chart of a similar ‘bubble’ which had occurred in the 1850’s. Back then, the new technology was the introduction of the railroad. Curiously, even 150 years apart, stocks still charted in a very similar fashion.
So, when understanding how to invest, I believe it is important to know the market events which have gone before us. As my mother always said, “forewarned is forearmed” and having knowledge of historical market shakeups can act like a ‘soothing cup of chamomile tea. ’ It genuinely helps to calm any thoughts of panic when we are able to reference similar past events and their conclusions.
It has always been one of the biggest mistakes made by market newcomers to believe that ” it’s different this time“. The causes may be different but the effects remain exactly the same.
Here are two favorite books that have taught me that there is certainly nothing new in investment markets.
Reminiscences of a Stock Operator,
This book was first published in 1923 and is a fictionalised account of one of the greatest ever traders – Jesse Livermore.
Don’t be put off by the publishing date. I can assure you that every page describes events that could easily have happened yesterday. And this is the real value in reading the book. What was happening way back then turns out to be the same happening today.
If you are learning how to invest today, then you should also be learning how they invested back then!
This book reads like a novel but with real purpose. It’s a great book to pick up from the bedside table before sleep.
How I made $2,000,000 in the stock market
Written in the late 1950’s by of all people, a traveling dancer named Nicolas Darvas. Not only do we get an insight into trading markets at that time, but also the enormous difficulty communicating with his broker as a result of his constant global travel. There was no internet back then!
A fantastic addition when you read this book is the detail about the ‘Darvas Box’ trading method created by the author and the reason he made $2 million dollars. For just this trading method alone, it is well worth buying this book.
Trading for a Living – by Dr. Alexander Elder
For someone wanting to learn about trading with technical analysis, you just can’t go past ‘Trading for a Living” by Dr. Alexander Elder. The book introduces key aspects of technical trading in a comprehensive but easy to read format. It also covers a lot of the psychology that is inextricably linked to share trading.
Take it from me, the book is written to teach, and teach it certainly does. It covers all the major indicators, what they mean and how to use them plus lots more. It is a perfect introduction to technical trading as well as a detailed handbook for more advanced traders.
Dr. Elder is ‘the guy’ as far as I’m concerned and this is a book that really does belong in the library of every share investor and trader.
The Essays of Warren Buffett – by Warren Buffett
What better way to learn to invest than getting inside the head of the greatest investor of all time? Here is a collection of over 700 pages of Buffett’s letters and notes and provides a clearer picture of the billionaire’s philosophies on business, investing, and life—and while it’s full of gems, it centres around one core concept: the difference between price and value. A nice companion to “The Intelligent Investor”
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing – by Burton Malkiel
Burton Malkiel’s classic guide to investing has been established as the go-to book to buy when starting a portfolio. In “A Random Walk Down Wall Street,” the Princeton professor takes on a number of investing strategies, axioms, truisms, and superstitions, explaining why low-cost index funds will serve the individual investor better than any other strategy for choosing stocks. This book is well worth spending some time with.
The Little Book of Common Sense Investing – by Jack Bogle
Endorsed by Buffett in his 2014 Berkshire Hathaway shareholder letter, “The Little Book of Common Sense Investing” tells you how to use index funds to build wealth.
Bogle, the founder of the Vanguard Group and creator of the world’s first index fund, explains why these relatively straightforward vehicles can be so effective—and warns against investment fads and fashions.
Buy this and see what all the fuss is about.
