You can learn a lot from great investing books. The only problem is picking the right ones to read. We share with you three timeless investing books that should be on your shelves.
Words by Lee Weiliang
Most successful investors have one thing in common – they’re great readers. For example, take legendary investor Warren Buffett. He spends about 80% of his day reading. If you don’t know how to differentiate chalk from cheese when it comes to investing or just want to gain more knowledge, here are our three definitive investing books for investors.
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With 2015 just around the corner, these are the perfect reading materials to set you on the road to achieving your financial resolutions.
- Beating the Street by Peter Lynch
Get into the mind of Peter Lynch, the former fund manager of the legendary Fidelity Magellan Fund. In the book, Lynch shares and explains his personal strategies on how he grew assets of US$20 million to an incredible US$14 billion during his tenure of 13 years. The fund averaged an amazing annualised return of 29.2 percent from 1977 to 1990, and Lynch reportedly beat the S&P 500 Index benchmark in 11 out of those 13 years.
From witty advice such as “Never invest in any idea you can’t illustrate with a crayon” to methods on identifying and selecting good stocks, you can expect both technicalities and easy-to-understand principles, many of which can be applied to your everyday investing approach.
Moreover, the book contains valuable insights on the workings of different industries. One we found particularly useful was the one about cyclical companies in chapter 15. “With most stocks, a low price/earnings ratio is regarded as a good thing, but not with the cyclicals. When the P/E ratios of cyclical companies are very low, it’s usually a sign that they are at the end of a prosperous interlude,” Lynch writes.
The book ends off with Peter Lynch’s personal rendition of “25 Golden Rules”, which summarises the particularly important lessons he acquired from two decades of investing. Smart investors who recognise the significance of learning from others’ experiences will certainly find Beating the Street a prized read.
- The Value Investors: Lessons from the World’s Top Fund Managers by Ronald Chan
A combination of biographies and investing lessons from 12 renowned investors around the world, The Value Investors is a must read for the everyday investor looking to make better decisions in the stock market.
Chan, the author of the book, conducted interviews with behemoth investors such as Irving Kahn from Kahn Brothers Group, Mark Mobius from Templeton Emerging Markets Group, and our very own Teng Ngiek Lian, the founder of Target Asset Management.
The interviews condensed the investors’ careers, experiences, and thoughts on investing. Readers will uncover various perspectives that challenge fundamental investing principles such as: “A good business may not necessarily be a good investment and a good investment may not necessarily be a good business.” Though it sounds ironic, this quote from Mr Teng thoroughly explained why a top retailer in Hong Kong had to shut down, despite being a thriving business.
As for the adage about diversification and not putting all your eggs into one basket, Teng believes in the opposite. It’s far easier and better to “put most eggs in one basket, and then watch that basket!”
The Value Investors is easy to understand. Whatever you experience or level of understanding, you will definitely discover something new about the world of investing. We love the concluding chapter of the book – Chapter 13, The Making of a Value Investor – which has excellent pointers as well as a summary on how to be a successful value investor.
- A Random Walk Down Wall Street by Burton Malkiel
Recognised as one of the classics on investing, this book comprises comprehensive investigation into the world of stocks and is the perfect place to start when you’re about to start your own portfolio.
While most financial books categorise themselves as either a financial history book or financial knowledge tome, A Random Walk Down Wall Street straddles both. The author has done an ingenious job using historical events to illustrate the importance of financial knowledge in an increasingly messy world.
Malkiel discusses many interesting and hotly debated issues such as herd mentality, technical and fundamental analysis, and Efficient-Market Theory, and his thoughts might surprise you. A Random Walk Down Wall Street presents itself as a thorough and non-biased book for both seasoned and inexperienced investors.
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