ten books every investor should read

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Ten Books Every Investor Should Read

Posted: May 31, 2009 | ReprintsEmail

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Warren Buffett

Investopedia Staff

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When it comes to learning about investment, the internet is one of the fastest, most up-

to-date ways to make your way through the jungle of information out there. But if you'relooking for a historical perspective on investing or a more detailed analysis of a certaintopic, there are several classic books on investing that make for great reading. Here

we give you a brief overview of our favorite investing books of all time and set you on thepath to investing enlightenment. (To find more recommended books, see Investing

Books It Pays To Read .)

"The Intelligent Investor" (1949) by Benjamin GrahamBenjamin Graham is undisputedly the father of value investing . His ideas about security

analysis laid the foundation for a generation of investors, including his most famousstudent, Warren Buffett . Published in 1949, "The Intelligent Investor" is much more
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readable than Graham's 1934 work entitled "Security Analysis", which is probably themost quoted, but least read, investing book. "The Intelligent Investor" won't tell you how to pick stocks, but it does teach sound, time-tested principles that every investor can use.

Plus, it's worth a read based solely on Warren Buffett's testimonial: "By far the best book on investing ever written."

"Common Stocks And Uncommon Profits" (1958) by Philip Fisher

Another pioneer in the world of financial analysis, Philip Fisher has had a majorinfluence on modern investment theory. The basic idea of analyzing a stock based ongrowth potential is largely attributed to Fisher. "Common Stocks And Uncommon

Profits" teaches investors to analyze the quality of a business and its ability to produceprofits. First published in the 1950s, Fisher's lessons are just as applicable half a

century later.

"Stocks For The Long Run" (1994) by Jeremy Siegel A professor at the Wharton School of Business, Jeremy Siegel makes the case for - you

guessed it - investing in stocks over the long run. He draws on extensive research over thepast two centuries to argue not only that equities surpass all other financial assets when itcomes to returns, but also that stock returns are safer and more predictable in the face of

the effects of inflation . (To learn more, check out Ten Tips For The Successful Long-

Term Investor .)

"Learn To Earn" (1995), "One Up On Wall Street" (1989) or "Beating TheStreet" (1994) by Peter Lynch Peter Lynch came into prominence in the 1980s as the manager of the spectacularly performing Fidelity Magellan Fund. "Learn To Earn" is aimed at a younger audience and

explains many business basics, "One Up On Wall Street" makes the case for the benefitsof self-directed investing, and "Beating The Street" focuses on how Peter Lynch went

about choosing winning stocks (or how he missed them) while running the famedMagellan Fund. All three of Lynch's books follow his common sense approach, which

insists that individual investors, if they take the time to do their homework, can perform just as well or even better than the experts.

"A Random Walk Down Wall Street" (1973) by Burton G. Malkiel This book popularized the ideas that the stock market is efficient and that its prices

follow a random walk . Essentially, this means that you can't beat the market. That's right- according to Malkiel, no amount of research, whether fundamental or technical , will

help you in the least. Like any good academic, Malkiel backs up his argument with piles
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of research and statistics. It would be an understatement to say that these ideas arecontroversial, and many consider them just short of blasphemy. But whether you agree with Malkiel's ideas or not, it is not a bad idea to take a look at how he arrives at his

theories. (For further reading, see What Is Market Efficiency? )

"The Essays Of Warren Buffett: Lessons For Corporate America" (2001) by Warren Buffett and Lawrence Cunningham

Although Buffett seldom comments on his current holdings, he loves to discuss theprinciples behind his investments. This book is actually a collection of letters that Buffett wrote to shareholders over the past few decades. It's the definitive work summarizing the

techniques of the world's greatest investor. Another great Buffett book is "The WarrenBuffett Way" by Robert Hagstrom. (For further reading, see Warren Buffett: How He

Does It and What Is Warren Buffett's Investing Style? )

"How To Make Money In Stocks" (2003, 3rd ed.) by William J. O'Neil Bill O'Neil is the founder of Investor's Business Daily , a national business of financial

daily newspapers, and the creator of the CANSLIM system. If you are interested in stock picking, this is a great place to start. Many other books are big on generalities with littlesubstance, but "How To Make Money In Stocks" doesn't make the same mistake. Reading

this book will provide you with a tangible system that you can implement right away in

your research. (For more about CANSLIM, see Trader's Corner: Finding The Magic Mix Of Fundamentals And Technicals .)

"Rich Dad Poor Dad" (1997) by Robert T. Kiyosaki This book is all about the lessons the rich teach their kids about money, which, accordingto the author, poor and middle-class parents neglect. Robert Kiyosaki's message is

simple, but it holds an important financial lesson that may motivate you to startinvesting: the poor make money by working for it, while the rich make money by having

their assets work for them. We can't think of a better financial book to buy for your kids.

"Common Sense On Mutual Funds" (1999) by John Bogle John Bogle, founder of the Vanguard Group, is a driving force behind the case for indexfunds and against actively-managed mutual funds. In this book, he begins with a primer

on investment strategy before blasting the mutual fund industry for the exorbitant fees itcharges investors. If you own mutual funds, you should read this book. (To learn more,

see The Truth Behind Mutual Fund Returns .)

"Irrational Exuberance" (2000) by Robert J. Shiller
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Named after Alan Greenspan's infamous 1996 comment on the absurdity of stock market valuations, Shiller's book, released in Mar 2000, gives a chilling warning of the dotcom bubble's impending burst. The Yale economist dispels the myth that the market is

rational and instead explains it in terms of emotion, herd behavior and speculation. In anironic twist, "Irrational Exuberance" was released almost exactly at the peak of the

market. (To learn more on this topic, see Understanding Investor Behavior .)

The more you know, the more you'll be able to incorporate the advice of some of theseexperts into your own investment strategy. This reading list will get you started, but it isonly a fraction of all the great resources available. Do you have a favorite investing book

that we've missed? If so, let us know .

For an overview of some of the world's greatest investors, check out The Greatest Investors . by Investopedia Staff

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