Business
19 Books Every Successful Investor Has Read
Investors are made, not born.
These books will help you to become a great investor of this day and age.
1. “The Intelligent Investor” by Benjamin Graham
Warren Buffett, the legendary investor, and respected financial expert, listed this book as one of the best books to read if you want to learn more about investing.
His favorite chapters include how to navigate the especially strong markets, as well as the especially weak markets.
Investors can use the advice from Graham, who has been called the father of value investments, to strengthen their investment portfolios.
Within this book, readers can understand the meaning of value investing as the ability to find a stock that the market has thus far undervalued, and holding onto it until the market see it as worth something.
2. “The Little Book That Beats the Market” by Joel Greenblatt
The purpose of this book is to help investors take the complications and complexity out of investing.
It takes the essence of investing and transcribes it into something that is simple enough for anyone to understand.
The magic formula rules are described in detail in Joel Greenblatt's book, “The Little Book That Still Beats the Market,” and are displayed in the following graph:
The author has proven success in investing throughout his career, averaging returns each year of 40% for more than 20 years.
So readers know that they can trust him.
He takes everything that he knows about investing and explains it using math at the level of a sixth grader, using simple language that is easily understood.
3. “Fooled by Randomness” by Nassim Taleb
Nassim Taleb is a very famous investment writer, who uses a set of core values to help people understand the various complexities and subtleties of investing.
In this book, he outlines how the idea of probabilities, and “alternative histories” can help you understand how to be a better investor.
Probability is an inevitability when dealing with the stock market, and understanding how it works, and how you can use it to your advantage.
By using probability as a tool, rather than as something that occurs to you, you can make smarter and more profitable investments now and in the future.
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[ms_featurebox style=”4″ title_font_size=”18″ title_color=”#2b2b2b” icon_circle=”no” icon_size=”46″ title=”Recommended Link” icon=”” alignment=”left” icon_animation_type=”” icon_color=”” icon_background_color=”” icon_border_color=”” icon_border_width=”0″ flip_icon=”none” spinning_icon=”no” icon_image=”” icon_image_width=”0″ icon_image_height=”” link_url=”https://offers.thecapitalist.com/p/warrenbuffet/index” link_target=”_blank” link_text=”Click Here To Find Out What It Said…” link_color=”#4885bf” content_color=”” content_box_background_color=”” class=”” id=””]Warren Buffett Just Told His Heirs What He Wants them To Do With His Fortune When He Dies. [/ms_featurebox]
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4. “The Most Important Thing” by Howard Marks
One of the most important things that a lot of the top investors say every smart investor must have is critical thinking skills.
This is also a skill which, sadly, many investors are lacking.
Often people rely on one of two trading and investment philosophies.
Either they rely on blind luck to guide their investments, or they pick a strategy and blindly follow that as they try and find the right investments for them.
Unfortunately, neither of this are going to lead to long term trading and investment success.
The best way, according to Marks, is to utilize critical thinking when making decisions on investments.
5. “Poor Charlie’s Almanac” by Charlie Munger
Charlie Munger is one of the most underrated investment strategists.
He has incredible ideas that many people follow in their everyday investment activities, but do not realize are attributed to him.
With this book, readers will find a compendium of the speeches from Munger throughout his career.
It is a very academic read, and will focus on the wisdom of investment trading, as well as the critical thinking, and the psychological aspects of trading that will effect every trading decision that you make.
However, Munger cuts through all of his academic language with wit and humor which will make the ideas easier to understand for any investor.
6. “Common Stocks and Uncommon Profits” by Philip Fisher
Most people know who Warren Buffett is, and most of those people trust that he knows what he is doing when it comes to money management and investments.
When asked who inspires him, and where he bases his management and investment philosophies off of, he lists two people – Benjamin Graham and Phillip Fisher.
The following is a graph depicting the performance of the Philip fisher Screen from January 1998 to August 2008:
Phillip Fisher has one of the best-proven investment strategists for finding, buying, and holding companies which end up being large stores of profit in the long run.
If the teachings of Fisher are good enough for Buffett, they are good enough for you.
7. “The Dao of Capital” by Mark Spitznagel
In Mark Spitznagel’s “The Dao of Capital,” he describes a very specific methodology and philosophy for investing and for building wealth.
He describes the Austrian method of investment.
In this trading and investment philosophy, the goal is to identify, obtain, and maintain the positional advantage in the trade or investment situation.
It is a risky strategy, but it is one of the smarter ways that you can utilize risk taking within your investing and trading.
You can find a comfortable medium between being too afraid of taking any major risks, and being overly risky and dangerous with your decisions.
8. “Buffett: The Making of an American Capitalist” by Roger Lowenstein
Warren Buffett is one of the most recognizable names and faces in investments and trading.
He has seemingly found the perfect system for making and maintaining his wealth throughout many different markets.
Despite the highest of highs and the lowest of lows, Buffett has been able to maintain his wealth.
It is thanks to Buffett that many people got into value investing, and it has restored many people’s faith in value investing.
This book goes through his life and gives important and helpful hints that investors can use in their daily practices.
When we set our goals, we typically define them in comparison to other people's.
Those who have succeeded and have done something with their life, are the ones we look up to, and who we want to emulate.
We want to achieve that they have achieved.
Within Thorndike’s book, he finds eight of the most successful and creative CEOs and details how they obtained their success.
If you want to be like them, you can see what they did, and apply that to your life, and your investment strategies and philosophies.
10. “The Misbehavior of Markets: A Fractal View of Financial Turbulence” by Benoit Mandelbrot
Often, when the average investor tries to read books on investment, they see something highly theoretical, and not very practical.
The theory works well to an extent, but when you want to apply something to the real world, and to an actual investment situation.
But with Mandelbrot, you will read theories which are legitimately applied to the real world.
It is practical, and realistic for the modern market.
It critiques the common and popular modern finance theory, which believes that the underlying assumptions of distributions are normal.
11. “Why Stocks Go Up and Down” by William Pike
For those who are looking for a book which will give them a basic understanding of bond investing and equity, Pike’s book is a strong choice.
It will give you the basics of these ideas, including financial statements, cash flows, and more.
It can help people in all aspects of the market, whether on the purely business side, or as someone who is looking to begin or continue investing.
It is touted as a book which can help you understand those other financial and investment books which take the topic to a highly intellectual level.
12. “Bull: A History of the Boom and Bust, 1982-2004” by Maggie Mahar
When we are in the midst of a financial decline, as we are currently, we often have a hard time seeing our way out of it, and how it will ever be better for us.
The same can be said for the reverse, when the market is strong and is providing large profits, we often believe that nothing will end it.
Both of these beliefs are completely wrong.
Mahar details the massive boom from 1982 to the early 2000s.
She wants investors to remember that no matter the high, we will all be tainted in our trades and investments by the euphoria of making money off of smart trades.
13. “The Great Crash” by John Kenneth Galbraith
This is one of the smaller books on this list, but that does not mean that it is any less informative for readers.
It teaches its readers a history lesson, going back to the crash of the 1920s, detailing the way the market exploded, and then crashed as a result.
What Galbraith was trying to say, and trying to show in this book, is that every market bubble reacts this same way.
It is an informative look at the cycle of the market, and despite being written in the 1950s, it is still relevant to today’s markets.
14. “A Random Walk Down Wall Street” by Burton G. Malkiel
A book written in the 1970s gives what has become one of the best explanations and statement of what has been called the efficient-market hypothesis.
The efficient-market hypothesis claims that the market is measured by two things – the fact that in the long run averages are the most important, and the general randomness of the market.
Because of these two factors, there is no point in trying to fight the market.
15. “Stocks for the Long Run” by Jeremy Siegel
Each investor is going to have a different philosophy or strategy that they will hold to when they are looking for possible trades and investments.
One of the most popular and successful strategies is what is known as the buy and hold strategy.
Siegel’s book has long been seen as the gold standard for strategy.
Siegel is a professor at the prestigious Wharton School and has identified the “Siegel constant,” which says that over the past 200 years, stocks have risen at a steady rate of 6.6%.
16. “Common Sense on Mutual Funds” by John Bogle
John Bogle is the pioneering founding of the 1970s index fund, the Vanguard Group.
Thanks to this experience, he has become a leading voice for what fighting against what has been called “active” fund management.
For anyone who is considering following an active fund management strategy, this book is vital to read.
He believes that active fund management strategies will ask for money and fees for services and performances that you know that you cannot follow through.
Warren Buffett has proven to be one of the most successful investors in the market today.
Some of his works have already been included on this list, as his work is included in many other books that are important for investors to read if they want to be successful.
In this book, a collection of his various essays has been compiled for the investor to read, either as an introduction to investing or as a way to continue and grow your understanding of investment.
18. “Irrational Exuberance” by Robert Shiller
In this book by Shiller, he compares the long term market with the short term market.
In the long term market, most financial analysts will describe it as efficient, and for the most part rational.
However, in the short term, the market is but the exact opposite.
In the short run, the market is “hysterical,” as Shiller has described.
The problem with this is that the irrational behavior of investors which is characteristic of the short term can often last much longer than the short term.
This can lead to negative effects that begin to affect the long-term functioning of the market.
19. “The Black Swan” by Nassim Taleb
The subtitle of this book, “The Impact of the Highly Improbable,” describes the basic foundation of this book.
Taleb uses this book to challenge our ideas of what is typical in the marketplace, and for what you should be prepared for.
Too many times, we only prepare for the predictable.
The unpredictable is much less likely to occur, so why prepare for it?
Taleb reminds us that it is typically the unpredictable events which are most likely to have the greatest effect and that we need to be prepared for everything which can affect us.
