Books on Investing: What should you read?
Let’s take a step back here and check our investing book libraries. There are very good chances that we have overlooked some good books. In fact, there is nothing I hate more than to browse a shelf of books in the bookstore only to overlook some important book that has slipped off the “A” list and into the remainder racks. Only the very best books are sold on a continual basis. All the others are cycled off the shelves to make room for new books.
Publishing, by the way, is a racket in my opinion. Why do we need to keep publishing new books that find new ways to say what we already know? Publishers know that the book-buying public will keep spending money on “new” books, even if they are really old books with new covers (and sometimes new introductions written by people with big names).
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) (Collins Business Essentials) by Benjamin Graham, Jason Zweig, and Warren EA. Buffett. Everyone should have at least one book that draws upon the wisdom and experience of Warren Buffett. Few people have lost as much money as he has; and yet, he is one of the wealthiest men in history. There is much wisdom to be learned from Mr. Buffett and his friends, and this book has more than 1,000 reviews on Amazon.
The Compound Effect by Darren Hardy. Published in 2012, this book has earned over 1200 reviews from highly satisfied readers. Hardy isn’t telling us anything new but he has broken down the way that money builds up by itself when you put it where it collects interest and compounds (especially on a daily basis). Don’t be overwowed by the “daily penny compounding” principle because it is just a lesson you are meant to take to heart.
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns by John C. Bogle. This book came out in 2007, just prior to the Great Recession and it reflects some of the thinking that led to the financial market meltdown. But Bogle has garnered rave reviews and his basic premise is simple and sound enough. Bogle teaches you how to manage your portfolio through index funds, and why the math works best this way for investors of all levels. It should come as no surprise that index funds are now among the most popular investment strategies. A lot of people have taken this advice to heart.
Rich Dad’s Guide to Investing: What the Rich Invest in, That the Poor and the Middle Class Do Not! by Robert T. Klyosaki. The title alone is enough to intrigue even the most casual investor. Klyosaki is a bit too enthusiastic with his “opportunity is there for everyone” approach but what his enthusiasm brings to the discussion is, well, his enthusiasm. This is considered one of the hallmarks of great leaders (and great investors). They don’t think they will fail in the long run and so they take risks. Being too timid is what holds most people back. Being too risky is what destroys many who fail. Klyosaki argues that there are great investment strategies used by the wealthy to protect their capital and grow their assets. He believes everyone can follow their example.
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing (Tenth Edition) by Burton G. Malkiel. This book has entered into its tenth printing and, originally published in the 1970s, it represents “old school” investment thinking. Although it may not be as sexy in its approach as more recent thoughts on investing, Malkiel is still a major voice in a crowded field of “experts” and gurus. Worth a read to be sure.
It is hard to pick just five books that everyone should own but these are good books that have been audience-tested. Sure, you’ll find disclaimers and debaters but that is true of every book. No system is perfect and some investment strategies just think so differently from the rest of us that there is little hope the majority of people will grasp their methods.
You still need to diversify your thinking and influences. Following only one investment expert’s advice is a risky proposition in itself. His strategies may stop working under certain conditions. You need to be flexible and ready to change horses when the signs show your current strategy is growing tired.