Investment Books Worth Reading

The following list of investment books has been borrowed from a recent blog I read by author Charles Rotblut, CFA is the editor of the AAII Journal, the flagship publication of The American Association of Individual Investors (AAII).

Of these books listed I have read “Random Walk Down Wall Street” , actually I downloaded an audio book from my local library.
 

Good Investment Books

” The Billion Dollar Mistake ” (John Wiley & Sons) – Stephen Weiss chronicles the biggest mistakes made by 11 famous investors, including Kirk Kerkorian. Weiss explains each investor’s strategy and details how they strayed from it. One of the really insightful things about this book is the What Went Wrong section at the end of each chapter. This is both a fascinating read and one that will have you shaking your head.

1. ” Questions and Answers on Life Insurance ” (Life Insurance Sage Press) – Tony Steuer’s book appeared on my desk two months ago and I have already found myself perusing it several times. This is a useful reference guide to life insurance and annuities. Steuer does a fantastic job of explaining complex topics in straightforward language.
2. ” Financial Shenanigans: How to Detect Accounting Gimmicks & Fraud in Financial Reports ” (Third Edition, McGraw-Hill) – I was excited when Howard Schilit published a new edition of this book last April. Schilit goes into detail about how companies twist, bend and even break accounting rules to cover up bad news and make their fiscal status seem better than it really is. The latest edition adds new fraudulent techniques, including how companies can misrepresent cash flow. (An excerpt of this book appeared in the August 2010 AAII Journal.)
3. ” The Warren Buffetts Next Door ” (John Wiley & Sons, 2011) – Forbes editor Matthew Schifrin profiles 10 individual investors whose performance has greatly exceeded that of the broad market averages. What separates each of these investors is their willingness to analyze individual securities, as opposed to following the crowd. Schifrin does an excellent job of explaining each individual’s strategy and providing actionable steps based on them.
4. ” How to Make Money in Stocks: Complete Investing System ” (McGraw Hill) – William O’Neil starts his new book with 100 charts to visually explain how he applies technical analysis. The remainder of the book builds on the content he has previously published and the CAN SLIM system he is known for.

Investment Classics

1. ” Security Analysis: The Classic 1934 Edition ” (McGraw-Hill, 1996) – Benjamin Graham and David Dodd provide a thorough discussion of how to analyze a company, from both a debt and an equity perspective. The language is dated, as the book was first published in 1934, but the lessons and the warnings remain very relevant more than 75 years later. I will caution you, however, that at over 700 pages, this is not light reading.
2. ” The Intelligent Investor ” (HarperBusiness, 2003) – This other masterpiece by Benjamin Graham was written with the individual investor in mind. In this easier-to-read book, Graham provides guidance for creating a portfolio, including suggested upper limits for valuation ratios. The original edition was published in 1949, and Graham tinkered with his suggestions for valuation in later editions.
3. ” Common Stocks and Uncommon Profits and Other Writings ” (John Wiley & Sons, 2003) – If you are a growth investor, this book should be on your reading list. Philip Fisher provides 15 questions that should be asked when analyzing a company. Though individual investors cannot directly follow his suggestions, the questions provide a good framework for analyzing a business model and, more importantly, a company’s future prospects. Originally published in 1958, the examples are outdated, but they provide good insight into Fisher’s philosophy. Warren Buffett is said to be have been influenced by both Graham and Fisher.
4. ” A Random Walk Down Wall Street ” (W. W. Norton & Company, 2007) – Burton Malkiel lays out the argument that stock prices are unpredictable and explains why using a passive investing strategy (buying a fund that mimics a major index, such as the S&P 500) works. Malkiel has effectively updated this book over the years, with the 2007 edition including discussions about behavioral finance and how to change one’s portfolio for one’s stage in life. A new updated edition with information on the Great Recession and emerging markets is scheduled for publication in January 2011.

The source can be found at this Seeking Alpha Blog Post

Dan Iuculano, AAMS CMFC

Accredited Asset Management Specialist

Chartered Mutual Fund Counselor