The 11 best books for beginning investors

November 17, 2017

 

John Szramiak

Generally, the most successful people in the world are also voracious readers. This is also true of the most successful value investors.

Both Warren Buffett (who used to read 1,000 pages a day when he was starting out) and Charlie Munger (who often advises young investors to “develop into a lifelong self-learners through voracious reading”) credit their habit of reading as a major contributor to their success. Ben Graham was an even more prolific reader than his successors – he would often quote the Latin and Greek classics and once translated a Spanish novel into English.

Hopefully, I’ve convinced you how important it is to read and learn, especially if you are new to investing. Luckily, I’ve compiled a list just for you (don’t worry, you won’t have to translate anything from Spanish).

Here are the 11 best investment books for beginners:

The Intelligent Investor: The Definitive Book on Value Investing

The Intelligent Investor: The Definitive Book on Value Investing
Benjamin GrahamWikimedia Commons

The Intelligent Investor: The Definitive Book on Value Investing by Benjamin Graham

If you only ever read one investment book, then let it be The Intelligent Investor by Benjamin Graham. There’s a reason why Graham is called the “Godfather of Value Investing.” Benjamin Graham was probably the most influential investing figure of the 20th century, and The Intelligent Investor is probably the most influential investment book of all time. The Intelligent Investor is the value investor’s bible… keep this one on your bedside table.

The Essays of Warren Buffett: Lessons for Corporate America

The Essays of Warren Buffett: Lessons for Corporate America
Reuters/Shannon Stapleton

The Essays of Warren Buffett: Lessons for Corporate America by Lawrence Cunningham (editor), Warren Buffett

If The Intelligent Investor is the value investor’s bible, then The Essays of Warren Buffett are the value investor’s New Testament. Warren Buffett has been writing essays on investing and business for 50 years, and his genius – combined with his down-to-earth charm and clear prose – makes him perhaps one of the greatest educators as well as one of the greatest investors to have ever lived. Many of these essays can be found for free online, but The Essays of Warren Buffett by Lawrence Cunningham brings them all together under one roof.

Value Investing: From Graham to Buffett and Beyond

Value Investing: From Graham to Buffett and Beyond
Warren Buffett and Benjamin GrahamThisIsRealBusiness/YouTube; AP Photo

Value Investing: From Graham to Buffett and Beyond by Bruce Greenwald, Jude Kahn, Paul Sonkin, and Michael van Biema

Bruce Greenwald is the Robert Heilbrunn Professor of Finance and Asset Management at Columbia University and is one of the leading authorities on value investing. This book gives the most comprehensive overview of value investing of any investment book I’ve read, covering general techniques of value investing as well as profiles of successful value investors such as Warren Buffett and Mario Gabelli.

 

Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Run Investment Strategies

Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Run Investment Strategies
Jeremy Siegel, professor of finance at the Wharton School, University of Pennsylvania, participates in a panel discussion during the Skybridge Alternatives (SALT) Conference in Las Vegas, Nevada May, 9, 2012.REUTERS/Steve Marcus

Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Run Investment Strategies by Jeremy Siegel

Jeremy Siegel‘s nickname is the “Wizard of Wharton” (he’s been teaching there for 45 years). His investment book Stocks for the Long Run is sometimes called “the buy and hold Bible.” The book makes the convincing argument that – after you account for inflation – equities are actually the safest investment in the long run, proving the point that most people should be long-term, passive investors in the stock market.

The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns

The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns
Wikimedia Commons

The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns by John C. Bogle

Investing is all about common sense. Owning a diversified portfolio of stocks and holding it for the long term is a winner’s game. Trying to beat the stock market is theoretically a zero-sum game (for every winner, there must be a loser), but after the substantial costs of investing are deducted, it becomes a loser’s game. John C. (“Jack”) Bogle is the founder of the Vanguard Group and creator of the world’s first index fund, and The Little Book of Common Sense Investing is a top recommendation of Warren Buffett’s. There’s actually a funny story that when Jack Bogle first met Warren Buffett, Jack recognized Warren, went up and introduced himself, and he said to Warren, “you know the thing I really like about you is you have rumpled suits just the same as I do” – and Jack and Warren have been good friends ever since.

 

Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World's Most Famous Investor

Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World's Most Famous Investor
Warren Buffett.Scott Olson/Getty

Buffettology: The Previously Unexplained Techniques That Have Made Warren Buffett the World's Most Famous Investor by Mary Buffett and David Clark

Mary Buffett is Warren Buffett’s former daughter-in-law and her book Buffettology provides a good introduction to Warren Buffett’s investment approach. The book offers profiles and analysis of 54 “Buffett companies.” Read it for the qualitative discussion of Buffett’s investment style, and skim the mathematical chapters (which I didn’t find to be as useful).

 

One Up On Wall Street: How to Use What You Already Know to Make Money in the Market

One Up On Wall Street: How to Use What You Already Know to Make Money in the Market by Peter Lynch

Peter Lynch is one of the most successful investors ever – from 1997 to 1990, his Magellan Fund averaged a 29.2% compound annual return. In One Up on Wall Street, Peter Lynch explains how average investors can beat the pros by using what they know. According to Lynch, investment opportunities are everywhere: from the supermarket to the workplace, we encounter products and services all day long. By paying attention to the best ones, we can find companies in which to invest before the professional analysts discover them.

 

Competitive Strategy: Techniques for Analyzing Industries and Competitors

 

Competitive Strategy: Techniques for Analyzing Industries and Competitors
Michael Porter gives a TED Talk in 2013.TED

Competitive Strategy: Techniques for Analyzing Industries and Competitors by Michael Porter

Studying Michael Porter is one of the first things you do in business school. Competitive Strategy by Michael Porter has transformed the theory, practice, and teaching of business strategy throughout the world. This book introduces Porter’s 5 Forces to help investors analyze industry attractiveness, as well as the 3 forms of a company’s strategy – low cost, differentiation, and focus.

The Ascent of Money: A Financial History of the World

 

The Ascent of Money: A Financial History of the World
Niall Ferguson, a British historian, addresses the financial collapse of 2008 at the Newseum in Washington, October 1, 2009.REUTERS/Jonathan Ernst

The Ascent of Money: A Financial History of the World by Niall Ferguson

Niall Ferguson follows the money to tell the human story behind the evolution of our financial system, from its genesis in ancient Mesopotamia to the latest upheavals on what he calls Planet Finance. What’s more, Ferguson reveals financial history as the essential backstory behind all history, arguing that the evolution of credit and debt was as important as any technological innovation in the rise of civilization. This is a great overview of all things money and a nice introduction to the world of finance.

 

Thinking, Fast and Slow

 

Thinking, Fast and Slow
Daniel KahnemanSean Gallup/Getty Images

Thinking, Fast and Slow by Daniel Kahneman

Daniel Kahneman is a professor of behavioral & cognitive psychology at Princeton, winner of the 2002 Nobel Prize for economics, and author of the best-selling book on cognitive biases and heuristics: Thinking Fast & Slow. This book explains the natural biases that affect our judgment in everyday life, as well as in investing. If you want to be a great investor, then it’s critical to be aware of the biases and tendencies. This is a fascinating book, and Kahneman himself is actually the subject of Michael Lewis’s next book The Undoing Project.

The Millionaire Next Door: The Surprising Secrets of America's Wealthy

 

The Millionaire Next Door: The Surprising Secrets of America's Wealthy
Amazon

The Millionaire Next Door: The Surprising Secrets of America's Wealthy by Thomas Stanley and William Danko

 

Although less of an investment book, The Millionaire Next Door is a wonderful book for anyone who wants to grow their wealth. Stanley and Danko break down 7 common traits that show up again and again among those who have accumulated wealth. By the end of the book, you’ll understand that wealth in America is more often the result of hard work, diligent savings, and living below your means than it is about inheritance, advance degrees, and even intelligence.

 

 

 

 

 

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