When it comes to learning about investment, the internet is one of the fastest, most up-to-date and easiest ways to make your way through the jungle of information out there; be it videos, online lectures or simply following Bloomberg live; however, there is a difference between knowing and understanding, a fine line that separates the novice from the skilled, ergo in order to understand the subject of investing on a deeper level of understanding, one must follow the teaching of what some may call the fathers of investing and finance.
There are several classic books on investing that make for great reading. Below are a collection of books suggested by Richard Brandson, Goldman Sachs and Warren Buffet.
"The Intelligent Investor" (1949) by Benjamin Graham Benjamin Graham is undisputedly the father of value investing.
His ideas about security analysis laid the foundation for a generation of investors, including his most famous student, Warren Buffett. Published in 1949, "The Intelligent Investor" is probably the most quoted, but least read, investing book. "The Intelligent Investor" won't tell you how to pick stocks, but it does teach sound, time-tested principles that every investor could use.
Plus, it's worth a read based solely on Warren Buffett's testimonial: "By far the best book on investing ever written."
"Common Stocks And Uncommon Profits" (1958) by Philip Fisher Another pioneer in the world of financial analysis, Philip Fisher has had a major influence on modern investment theory.
The basic idea of analyzing a stock based on growth potential is largely attributed to Fisher. "Common Stocks And Uncommon Profits" teaches investors to analyze the quality of a business and its ability to produce profits. First published in the 1950s, Fisher's lessons are just as applicable half a century later. "Stocks For The Long Run" (1994) by Jeremy Siegel A professor at the Wharton School of Business, Jeremy Siegel makes the case for - you guessed it - investing in stocks over the long run.
He draws on extensive research over the past two centuries to argue not only that equities surpass all other financial assets when it comes to returns, but also that stock returns are safer and more predictable in the face of the effects of inflation.
"Learn To Earn" (1995), "One Up On Wall Street" (1989) or "Beating The Street" (1994) by Peter Lynch Peter Lynch came into prominence in the 1980s as the manager of the spectacularly performing Fidelity Magellan Fund. "Learn To Earn" is aimed at a younger audience and explains many business basics, "One Up On Wall Street" makes the case for the benefits of self-directed investing, and "Beating The Street" focuses on how Peter Lynch went about choosing winning stocks (or how he missed them) while running the famed Magellan Fund.
All three of Lynch's books follow his common sense approach, which insists that individual investors, if they take the time to do their homework, can perform just as well or even better than the experts."
A Random Walk Down Wall Street " (1973) by Burton G. Malkiel This book popularized the idea that the stock market is efficient and that its prices follow a random walk. Essentially, this means that you can't beat the market. That's right - according to Malkiel, no amount of research, whether fundamental or technical, will help you in the least. Like any good academic, Malkiel backs up his argument with piles of research and statistics.
It would be an understatement to say that these ideas are controversial, and many consider them just short of blasphemy. But whether you agree with Malkiel's ideas or not, it is not a bad idea to take a look at how he arrives at his theories.
"The Essays Of Warren Buffett: Lessons For Corporate America" (2001) by Warren Buffett and Lawrence Cunningham Although Buffett seldom comments on his current holdings, he loves to discuss the principles behind his investments.
This book is actually a collection of letters that Buffett wrote to shareholders over the past few decades. It's the definitive work summarizing the techniques of the world's greatest investor. Another great book is "The Warren Buffett Way" by Robert Hagstrom.
"How To Make Money In Stocks" (2003, 3rd ed.) by William J. O'Neil Bill O'Neil is the founder of Investor's Business Daily, a national business of financial daily newspapers, and the creator of the CANSLIM system.
If you are interested in stock picking, this is a great place to start. Many other books are big on generalities with little substance, but "How To Make Money In Stocks" doesn't make the same mistake. Reading this book will provide you with a tangible system that you can implement right away in your research.
"Rich Dad Poor Dad" (1997) by Robert T. Kiyosaki This book is all about the lessons about money the rich teach their kids, which, according to the author, poor and middle-class parents neglect.
Robert Kiyosaki's message is simple, but it holds an important financial lesson that may motivate you to start investing: the poor make money by working for it, while the rich make money by having their assets work for them. I can't think of a better financial book to buy for your kids.
"Common Sense On Mutual Funds" (1999) by John Bogle John Bogle, founder of the Vanguard Group, is a driving force behind the case for index funds and against actively-managed mutual funds. In this book, he begins with a primer on investment strategy before blasting the mutual fund industry for the exorbitant fees it charges investors. If you own mutual funds, you should read this book.
"Irrational Exuberance" (2000) by Robert J. Shiller Named after Alan Greenspan's infamous 1996 comment on the absurdity of stock market valuations, Shiller's book, released in March 2000, gives a chilling warning of the dotcom bubble's impending burst.
The Yale economist dispels the myth that the market is rational and instead explains it in terms of emotion, herd behavior and speculation. In an ironic twist, "Irrational Exuberance" was released almost exactly at the peak of the market.
The more you know, the more you'll be able to incorporate the advice of some of these experts into your own investment strategy. This reading list will get you started, but it is only a fraction of all the great resources available. The whole notion of learning is never completed no matter the subject; there is always something new to learn.
This article was issued by Steve Diacono, for Calamatta Cuschieri. For more information visit, www.cc.com.mt.