Beach books for investors interested in the classics
As we are savouring the nice days of summer, perhaps it's a good time to review great books written on investing in the stock market. You are maybe wondering what to bring to the beach to read. Why not read about the principles of sound investing? It will perhaps help you to someday own a beach!
There are many great books out there. In the last few years, there have been legions of new books written about investing (not all equally good). But I'll start with the classics.
The first book to read is The Intelligent Investor. It was written in 1949 by Benjamin Graham, known as the "father of fundamental analysis." That book deeply influenced Warren Buffett (he likes to say that it changed his life). It is a book about investment principles, and you know what they say about principles: If they change they are not principles in the first place. More than 60 years have passed since Graham wrote this book and his principles are as valid today as they were then. For example, there is a complete chapter on the investor and how he should deal with market fluctuations (the famous Chapter 8). And in the conclusion, there is perhaps the most important phrase written about stock market investing: "Investing is more intelligent when it is most business-like." It means that owning stocks is about owning fractional parts of a business. And the more intelligent an investor is, the more like a business owner he behaves.
There is also an older book written by Philip Carrett in 1930: The Art of Speculation. Although the word speculation is used, Philip Carrett was a long- term investor. His list of 12 commandments is still relevant today. My personal favourite is: "Be quick to take losses and reluctant to take profits." As we get more experienced with markets, we realize how important this phrase becomes.
A totally different approach was developed by Philip Fisher, who lived on the West Coast. He wrote four books. The first one - and most famous - is Common Stocks and Uncommon Profits. It is probably the first book written on investing in "growth" stocks. In the 1960s, he published Path to Wealth Through Common Stocks and in the 1970s, Conservative Investors Sleep Well. They are all very good. Fisher had a deep focus on the quality of management. Again, it's all about principles. Many companies that Fisher refers to do not exist anymore (at least in their original form) but the numerous examples are quite instructive.
In the 1980s, John Train wrote two great books on Money Masters. The first one talks about Warren Buffett (at a time when he was unknown by most investors), John Templeton and Ben Graham.
There are dozens of books written about Buffett and a lot of redundancy is out there, but there are three that I would recommend: Warren Buffett: the Making of an American Capitalist by Roger Lowenstein, The Warren Buffett CEO by Robert P. Miles and Of Permanent Value by Andy Kilpatrick. This last one is quite a detailed book on everything regarding Buffett (it has more than 1,000 pages). In the spirit of full disclosure, I must confess there is a little chapter on my career and the influence of Buffett on my life in this book.
Recently, I have enjoyed books written by James Montier. My favourite is Value Investing: Tools and Techniques for Intelligent Investment. It was published in 2009, so it is quite timely in many of its studies.
Another recent book that I enjoyed is This Time is Different: Eight Centuries of Financial Folly by Carmen Reinhart and Kenneth Rogoff. This book provides a lot of historical perspective on the 2008-2009 crisis. We realize how much financial crises are part of our capitalist system and - although not pleasant - how they should be accepted and dealt with.
Finally, I would recommend reading Peter Lynch's books. They are instructive and also written in a more convivial style than the others. The most famous one - and still the best - is One Up on Wall Street. When I read that book, almost 19 years ago, it changed my life. It gave birth to a passion for stock investing that has not left me since.
Francois Rochon is the head of wealth-management firm Giverny Capital, which he founded in 1998.
Montreal Gazette
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A great summary in the Vancouver Sun today! I've read all these books and highly recommend both the Intelligent Investor and of course Common stocks and Uncommon Profits! Great books for beginner investors who want to get into the investing game... all these books are available on amazon.com
Happy Investing,
The 360 Investing Guys
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