I have no trades this week so I’m sharing some required reading. This post contains affiliate links.
music selection: “The Kill” — 30 Seconds To Mars
weigh-in: 198.4 +2.8 – Oof! Holiday party eating!!
I have a few go to books that I recommend to all investors, especially beginners. Reading these titles WILL make you a better investor.
The first book I recommend is “The Elements of Investing: Easy Lessons for Every Investor” by Burton G. Malkiel and Charles D. Ellis. This one has a feature that every investing book should begin with but doesn’t, namely that the process rightly starts with personal savings. You really want to start here if you are just beginning on the path to retirement.
The next book I recommend is Peter Lynch’s legendary tome “One Up On Wall Street”. This is a common sense guide to investing that lets you leverage what you already know to beat the market. No one has a better long term track record for investors than Lynch and you don’t want to miss this one. You’ll learn how to spot great businesses.
After that, you want to get into the details of valuing businesses. I recommend going with Joel Greenblatt another legendary investor who is oftentimes known as the man who “launched a thousand hedge funds” due to widespread implementation of his ideas in the hedge fund industry. The best and most intellectually accessible book by Greenblatt is “The Little Book That Still Beats The Market”. You’ll not only learn how to buy good businesses as with Lynch but you will supercharge your effort by learning only to buy them when they are cheap!
Feeling a little cheeky? Read the investing book with the most provocative name out there. That would be Joe Ponzio’s “F Wall Street”. The second section is titled “How to Approach Investing from a Business Perspective.” This makes it clear how to value a business by both cash flow and net worth, both of which are valuable tools.
Finally, I recommend another book by Joel Greenblatt that focuses on special situations in the market. These situations such as merger arbitrage, spinoffs, escape from bankruptcy investing and more are favorites of the most successful hedge funds. Best of all, they are strategies that most institutional investors can’t properly implement due to their scale. You have the advantage here as the retail investor. The title is “You Can Be a Stock Market Genius”.
Do you have favorite investing books that weren’t listed here? Be sure to share with the rest of the lizard army by leaving a comment.
Devour your prey raptors!