Some great investing books have been written, but many of the best have been written about the world of investing in stocks and shares. In fact, my favorite investor of all time was a guy named Benjamin Graham, who really pioneered the concept of value investing. Two of his books are in my top 3, along with works about Warren Buffet, arguably the most successful investor of all time.
The Intelligent Investor by Benjamin Graham
This book was first published in 1949 and remains my favorite investment book of all time. Various new editions have been published over time with updated commentary – the latest edition with commentary by Jason Zweig helps bring Graham’s value investing principles into the 21st century.
The Intelligent Investor teaches important principles about how contrarian value investors should behave. By far the most important lesson in this book is Graham’s margin of safety — you should only buy stocks that are significantly undervalued, so that you’ve given yourself a relatively large margin for error. Another important lesson he preaches is don’t listen to markets – he makes a very good analogy with a man named Mr. Market who comes into your office every day and asks you if you want to trade with him. Sometimes Mr. Market is insanely optimistic and offers you high prices that you should accept, while other times Mr. Market is very pessimistic and offers you very little – essentially, Graham says that you should value your investments yourself, rather than relying on them leaving what the market tells you they are worth.
Safety analysis by Benjamin Graham and David Dodd
If you’re relatively new to investing, then this probably isn’t the book for you – think of it as a more in-depth version of the Intelligent Investor. However, much more material is offered, including a more detailed section on bond investing, as well as how to invest intelligently in speculative stocks. If you want to read an investing book, read Intelligent Investor, but once you’ve done that, Security Analysis is worth reading.
The Snowball: Warren Buffett and the Business of Life by Alice Schroeder
Warren Buffett is one of the most successful investors of all time and he is also one of the richest men in the world – it pays to know this man’s approach to investing! Alice Schroeder meticulously researched Buffett and his investing techniques when writing this book. However, this is largely a biography of Buffett’s career — it contains a wealth of information that’s invaluable to investors, but best serves as an introduction to Buffett. Anyone interested in finding out more about Warren Buffett’s investment philosophy can visit Berkshire Hathaway’s website and read his letters to shareholders – gold dust for value investors. While these are my personal favorites, there are plenty of other great investing books to read – books by Jim Slater, Anthony Bolton, and Charlie Munger are also good for growth and value investors.
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