If you’re like me, you like to learn from the experience and wisdom of others. It’s much cheaper that way! When it comes to being an investor, few things can beat the knowledge you and I can absorb by reading books. Plus I just like to read.
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Five Books For Active Investors
The Intelligent Investor by Benjamin Graham. Graham was Warren Buffet’s professor and Buffet has declared that this book is “the best book on investing ever written.” Strong words from someone who’s used those investing strategies to make billions.
Payback Time or Rule #1 both by Phil Town. Town’s investment philosophy mirrors those of Warren Buffet and Ben Graham, that price and value are two different things. He shows you how to intensely scrutinize any business you invest in and how to make an educated guess about it’s value based on its past, present, and predicted future.
The Little Book That Beats the Market by Joel Greenblatt. The author’s private investment partnership, Gotham Capital, has produced 40 per cent a year returns over the past 20 years. The last time I checked, he was invested in only two stocks. 40 percent. Wow.
Irrational Exuberance by Robert J. Shiller. This Yale economist contends that emotion often determines prices in the stock market, resulting in prices that are often far higher or lower than values. Does anyone really believe that Yahoo was truly worth $500 billion in 1999?
One Up On Wall Street by Peter Lynch. This former manager of Fidelity Magellan Fund, the largest mutual fund in the world at one time, thinks you should be managing your own money. He wrote “The amateur investor has numerous built-in advantages that should result in outperforming the experts and the markets.”
Five Books For Passive Investors
How A Second Grader Beats Wall Street by Allan Roth. He believes you’re paying too much in fees, too much in taxes, and that the financial advisors you’re been using don’t have any idea where the market is headed. Our biases (and our financial planner’s biases) can cause us to lose big money over the long run. Invest in broad based ETFs or Vanguard funds and rebalance each year.
The Little Book Of Common Sense Investing by John Bogle. As the founder of the Vanguard Group, Inc., Boggle is THE guru of index investing, providing guidance to small investors in smaller and more direct terms than some of his other writings.
The Only Guide You’ll Ever Need for the Right Financial Plan by Larry Swedroe. In a easy-to-understand prose, Mr. Swedroe provides excellent information on the various types of equities, bonds, alternative investments, a valuable discussion on how to increase your tax-advantaged savings and important tips on asset location for maximum tax-efficiency.
Searching For Alpha by Ben Warwick. This is a great discussion of market efficiency versus stock picking from an active manager. This is a light-hearted book on a heavy subject that addresses such things as “the commonalities between catching monkeys in India and avoiding taxes on investments in the United States.” You want to read it now, don’t you?
The Wall Street Self Defense Manual by Henry Blodget. Though many people believe the author should be in jail because he was an insider and eventually was barred from the financial markets, no one knows more about how to spot a Wall Street scam than a former crook. His recommendation? “Diversify your assets, reduce your costs, and get out of the way.”