There are so many books on investing but if you are new to investing and just want to get a handle on the overall strategies and concepts, you need a book that is going to be an easy read on the topic. This list includes books that break those difficult concepts down for beginners and won’t put you to sleep! And while you may find about 1,000 lists out there that break down their own list of best books, my own philosophy on investing will help you understand how I came up with my list.
- Asset allocation is the number one contribution to portfolio performance
- Keep investment costs low
- There is no get rich quick scheme
- I tend to favor passive management the majority of the time (active in certain circumstances)
Random Walk Down Wall Street
A Random Walk Down Wall Street by Burton Malkiel is the first book I ever read on investing and it really opened my eyes as to how the overall stock market works and what is really involved. It makes the case that stocks are fairly priced by the market and there really is no point in trying to pick the best but more importantly to be diversified.
The Intelligent Investor
The Intelligent Investor was written several years ago by Benjamin Graham. If you’ve ever heard that name you would know that Graham was a mentor to Warren Buffett! This book isn’t about randomly picking stocks but about how to value companies before you purchase them. If you’re interested in how stocks are fundamentally analyzed, this is the book for you.
Beating The Street
Beating The Street by Peter Lynch, one of the most successful portfolio managers of the 20th century, shares his insight as to how he decides whether to buy or sell a stock. He also discusses his belief of how the individual investor can beat Wall Street by investing in what they know. A very encouraging read.
Irrational Exuberance written by Robert Shiller is starkly different than the first book on the list. While A Random Walk Down Wall Street talks about the market fairly pricing stocks, this book addresses the extreme highs and lows of stock prices that we see in the market. He argues that social psychology and investors tendencies to follow market fads can lead to the extreme price fluctuations we see. This book isn’t so much on how to invest but more so what you can expect when investing over the long haul.
So while most of these books address the things I believe in such as passive management and low fees, you must understand that nobody can predict what the market is going to do or when a bubble is going to burst. While I tend to favor investing in passive management type products such as index funds, sometimes an actively managed can be a great addition to your portfolio. I tend to have a good mixture of both all the while paying attention to my overall costs in the portfolio. If you have read or get the chance to read any of the books above, let me know your thoughts.
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