One of the best ways to learn about anything is reading. Books about investing get a bad rap for being boring, but I am here to tell you that is just not true.  Below is a list of my favorite books on investing. They range from beginners to more advanced books. They are all well written and very informative and have been a tremendous influence on me as well as countless others. Some of them are extremely well-known and are some of the best of investing classics. But they are still amazing and should be read by everyone.

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I have said this before, and I will repeat it again. Learning about investing is like learning a new language. Reading is one of the best ways to immerse yourself in that language. As you learn more you will want to find out more; it is very addicting in that way. As you learn the language and build your knowledge, these following books will help you create more blocks to continue your learning.

There are affiliate links for these recommendations and based my choices on my opinion and the influence they have had on me and my journey. I hope you enjoy them as much as I have and am confident that you will benefit from them as well.

 

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1. The Education of a Value Investor

One of my first books that I read about investing. Written by Guy Spier who is the manager of the Aquamarine Fund, which is a hedge fund that he runs out of Switzerland.

Guy takes us on a journey of his life from his beginnings at business school, where he graduates and takes the first job that comes along, looking for the quick buck. But he quickly becomes disenfranchised and starts to find another way.

He discovers the writings of Warren Buffet and immediately takes to his philosophy. He starts down the path to becoming a Value Investor and learns as much as he can from Buffett and his other followers.

During his journey, he becomes friends with Monish Pabrai, also a famed value investor, and together they donate money to have lunch with Warren Buffett, and this cements his views and changes his life forever.

The thing I like most about this book is the realism that he speaks to you from. You can tell he is talking from the heart and is not ashamed to admit his mistakes and faults. He lets you see his warts and all which is refreshing. I felt as if he was talking to me directly which touched me and made a significant impact on my thought processes.

This book is all about Guy’s journey to become a better investor as well as a better person. It is not a book filled with formulas or outlines of paths to becoming a better investor. Rather it is a deep look inside to see who you are and what you can become. He is a profound thinker, and it shows.

I enjoyed this book immensely and would recommend this to anyone who is looking to better themselves; it is not just about value investing.

2. The Dhando Investor: The Low-Risk Value Method to High Returns

This very easy to read and incredibly well thought out book written by Monish Pabrai. I recently did an in-depth review of this book on one of my posts. Check it out here.

3. The Little Book That Still Beats the Market

Another early favorite from Joel Greenblatt. This book is one of the first in the series of “The Little Book that.”  For those of you not familiar with Joel, he is a value investor who is famous for a few things. First was his firm Gotham Capital which he managed from 1985 to 2006. During this time he averaged 40% returns!!! Crazy. Secondly, he is an author who has written several best-selling books. Thirdly he runs a website that helps investors find different ideas; it is called the Value Investors Club.

This straightforward to read and the warm book starts with the story of his son learning how the stock market works. He uses stories throughout the book to illustrate points, which makes it very easy to read and the points more memorable. In his first story, he talks about a boy selling gum in the school yard, and it goes from there.

Another story he uses is the one about Mr. Market to illustrate the point of how crazy the market can get. And how you can buy a company for a different price depending on the day. He borrowed this idea from Benjamin Graham, the famed value investor.

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The two main points the book makes are:

  1. A higher earnings yield is better than a low one
  2. companies with high return on capital are better than companies with a low return on capital.

He uses these most important points to discuss his “Magic Formula” which is the formula he uses to beat the market. There is a very detailed breakdown of how the method works and all the testing that he has done to show how it works and the performance through the years.

Bottom line, this is a very easy to read book that is perfect for beginners or intermediates as it discusses how stocks work, to the market and finally a breakdown of his Magic Formula.

I enjoyed this book; I think I read it in one day. Couldn’t put it down. Joel has a straightforward style, and I like the stories he tells to make his points. I have also tested the Magic Formula for myself and for 2016 it had a return of 16.8% which is not too shabby.