The following books are the more significant ones that I have read so far
and will recommend any Investor to read them be it whether you are a beginner
or an amateur with years of experience in investing.
1. The Intelligent Investor by Benjamin Graham
2. New Buffettology by Mary Buffett and David Clark
3. Common Stocks Uncommon Profits by Philip A.Fisher
4. The Essay of Warren Buffett: Lesson for Corporate America Compiled by Lawrence A. Cunningham
5. One Up on Wall Street by Peter Lynch
6. The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb
1. Warren Buffett and the Interpretation of financial statements by Mary Buffett and David Clark
2. A Step-By-Step Guide to Understanding and Creating Financial Reports By Thomas R. Ittelson
3. The Essentials of Finance and Accounting For Nonfinancial Managers by Edward Fields
The Intelligent Investor is a MUST read for all even if one does not align to the value investing philosophy. The first 10 chapters cover the key principles of investment that will help anyone to minimize losses in the long run, while the following chapters will cover the more technical aspect of evaluating a company like the margin of safety. Inside the book, chapter 8 is the most important as it addresses “Mr. Market” – the guy who will bring you great wealth if one is able to control it.
The other books are mostly about stock picking methods that are very helpful. Though no one knows if what Buffettology wrote is really how Warren Buffett works (I supposed Buffett do not use such fixed systematic and mathematical method), it’s pretty useful in providing you with a basic framework for finding a stock. Peter Lynch, the legendary fund manager who managed to attain more than 20% return for more than a decade, teaches retail investors how to utilize their advantages in stock picking. Common Stocks Uncommon Profits is a Classic that focuses on how to look for a growth company. Warren Buffett says that he is “85% Graham and 15% Fisher”, a testimony to how it has remained in print since 1958.
Special mention goes to The Black Swan though it’s not exactly a stock investing book as it helps to realign one’s definition and understanding of risks. Risk is definitely not just about probability or the Modern Portfolio Theory, but instead the possibility of the occurrence of any event. The history of Wall Street (for e.g. The infamous Long Term Capital Management advised by 2 Nobel Laureates in Economics) might not have been as shameless if they have really understand what it really means when we say “risk”. However, a word of caution for all, this is a very “heavy” reading as it is philosophical.
As Warren Buffett says “Accounting is the language of business”, one should avoid investing in stocks and bonds without being able to decipher the three financial statements of a company. Warren Buffett and the Interpretation of financial statements is a good introduction book as it is a pretty light reading and helps one in understanding the basic of financial statement analysis. A Step-By-Step Guide to Understanding and Creating Financial Reports is also a great textbook as what the title suggests, it guide you through the process of creating financial reports. One will go through the process where the financial statement is being changed when for e.g. one sold an item and shipped it to the customer.
The Essentials of Finance and Accounting For Nonfinancial Managers is for those who at least have a basic understanding of financial statement and it will go through in depth on financial statement analysis and the financial ratios. It teaches you how to interpret stuffs like how much cash should a company have and what to make of an increased in inventory and e.t.c.
Friday, December 30, 2011
I created this blog after I had started investing 5 months ago. The main purpose of this blog is for me to reflect on my investment's philosophy and mistakes as penning it down on the blog will certainly help to prevent me from committing investing mistakes that many, especially young investors, are prone to due to Greed and Fear.