Which 5 investing books have been the most influential to you?

[ItsAValueTrap]

Confessions of a Wall Street Analyst

The Wolf of Wall Street

 

The Snowball

Tap Dancing to Work

The Warren Buffett Way

[GregS]

1.  The Intelligent Investor - The first pure investing book I read. Literally changed my life.

2.  One up on Wall Street - In my investing style, I probably identify with Lynch more than any other major investor.

3.  The Most Important Thing - So much clear thinking on risk. I could read this book over and over and still learn things.

4.  Value Investing from Graham to Buffett - Learning the academic concepts in this book really helped mature my thinking on valuation.

5.  The Smartest Guys in the Room - This book on Enron showed me how greed and perverse incentives can result in enormous hype and then disaster.  It helped me realize how and why the bulk of the financial industry is so corrupt and incompetent.

[BG2008]

I'll list 10 books actually.  I find that the first five books are great for teaching people how to thinking about investing.  The latter books are great for application.  It's always great to teach people to work hard, eat right, etc.  But it's just as important to teach people how to squat, bench, bend your knees etc and "when it comes to protein, less legs are better.  Fiber is your friend.  Eat your calories, don't drink them." 

 

Top 5 for Philosophy - Not in any order

1. Buffet Annual Letters

2. Snowball

3. Securities Analysis

4. Margin of Safety

5. One Up on Wall Street

 

Top 5 for application

1. Buffet Partners Letters (prior to Berkshire)

2. You can be a stock market genius

3. 10 Ways to Improve your Investment Process

4. Other smaller fund managers' investment letters that details specific investments and their thought process

5. Michael Porter's - Competitive Strategy

 

[jhcap]

In chronological order:

 

Nothing Down by Robert Allen

Missed Fortune by Andrew Douglas

Rule #1 by Phil Town

You Can Be A Stock Market Genius

Margin of Safety

 

I got started with real estate so the first book that really made me start to think about investing concepts was Nothing Down by Robert Allen and then Missed Fortune by Andrew Douglas.

 

When I decided to learn about the stock market the first book that turned me on to value investing was Rule #1. It's a good introduction to identifying and valuing companies.

[yadayada]

5. Michael Porter's - Competitive Strategy

yesss, this one should be mentioned more. ANything by this porter guy.

[onyx1]

 

 

The Richest Man in Babylon, Clason,    I read it as a teenager

Contrarian Investment Strategies - The Classic Edition, Dreman,   I read it in my early twenties

The Little Book That Beats the Market, Greenblatt,  Word-for-word probably the best ever

The Essays of Warren Buffett, Cunningham  Timeless wisdom

Common Stocks and Uncommon Profits, Fisher  Good investments don't need to be distressed

 

[jtvalue]

In order of influence (a couple of mine have not been mentioned yet):

 

Buffett Letters & Articles (ie: How Inflation Swindles the Equity Investor)

Moneyball by Michael Lewis

Little Book that Beats Market by Greenblatt

Davis Dynasty by John Rothchild

Fooled by Randomness by Nassim Taleb

Stocks for Long Run Jeremy Siegel

[KCLarkin]

1. Essays of Warren Buffett

2. Intelligent Investor

3. The New Buffettology

4. Common stocks and uncommon profits

5. Poor Charlie's Almanack

 

Each of these books is deeply flawed but if you read them together you can cobble together a pretty powerful philosophy.

 

What does the new buffetology add? I haven't had a chance to read it yet and saw it was written by the ex-wife of Peter Buffett and wrote it off.

 

Buffettology is the most practical book on buffett I have found. Most others are just derivatives of his letters and therefore more philosophical. I'm not sure how much access they had to Buffett but it has content that I haven't seen anywhere else.

 

I watched an interview with Don Yacktman where he was talking about stocks as "equity bonds". A google search on "equity bonds" led me to Buffettology. Otherwise I would have skipped it too.

 

[thefatbaboon]

These two haven't been mentioned:

 

    Theory of Investment Value - Burr Williams

    Investment Valuation - A. Damodaran

 

Personally found them very helpful when I was getting started. 

 

[peter1234]

One to add (a favorite of Michael Burry):

 

A recently updated textbook that walks you through all the financial items on the balance sheet, income statement, cash flow statement from the perspective of a business owner.

 

Why Stocks Go Up and Down "The Book You Need To Understand Other Investment Books"

 

:) :)

[RhubarbXIV]

1. Genius. Both planted the seed and set the standard.

2. The New Finance- Bob Haugen. Helped me overcome my early doubts that little old me could beat the market.

3. Buffett: The Making of an American Capitalist. Probably the best-balanced book ever written on Buffett.

4. All Buffett's partnership letters + Berkshire letters + Fortune columns. Not a book, but these together taught me a lot about how to look at investments. Cunningham for the Cliffnotes version, but a lot is lost.

5. The Little Book That Beats The Market. More than anything helps me explain what I do for a living to the casually interested observer. Priceless for that alone.

 

[Straddle]

1) Warren Buffett, The making of an American Capitalist

2) Joel Greenblatt - The Little book that beats the market

3) Jack Schwager - Market Wizards

4) Mandelbrot - The misbehaviour of financial markets

5) Aronson - Evidence Based Technical Analysis

[benhacker]

1) Intelligent Investor

2) When Genius Failed (surprised not mentioned... I found it excellent and a stark warning of overconfidence in yourself and the system)

3) Margin of Safety

4) One Up On Wall Street

5) Making of an American Capitalist

--

6) Fooled by Randomness (good for thinking, despite his arrogant tone throughout)

[Happy]

1) Intelligent Investor

2) The Little Book that beats the Market

3) The Making of An American Capitalist

4) Buffett's shareholder letters

5) Poor Charlie's Almanack

[Ham Hockers]

hmmm am I the only person on this board who like Marty Whitman

[ukvalueinvestment]

I really enjoyed Mohnish Pabrai's book.  Talks a lot about making infrequent and big bets on stocks with little downside and lots of potential upside.  He calls it "heads I win, tails I don't lost too much".  He gives business examples (Indian Motel Owners, Richard Branson), as well as some case studies.  Finally he has a section on other approaches and where to source investments - eg Magic Formula.  He also has a section on Kelly Formula.

 

I would recommend this book as it's a little different to the others - a valuable addition to the investing armoury.

 

For those of you outside the UK, you may not have heard of: "How to get rich, slowly", by John Lee.  Basically it's by a private investor and FT columnist who was the first person, allegedly, to become an "ISA millionaire".  As ISA is a UK savings vehicle where you can invest £15k per year, tax free.  It used to be more like £10k.  If you are a married couple, you can save £30k per year now, and if you know what you are doing, this is an extraordinarily powerful long terms compounding vehicle.

 

John Lee's approach is to look for small and niche companies, with dividends and family ownership.  He believes that the family ownership means that fewer risks are taken, leading to better long term returns. 

 

[ni-co]

Thank you for your lists, guys! I really enjoy them and have already added several new books to my reading list.

 

I'm really surprised to see how influential Joel Greenblatt has been to quite a few board members. Certainly true for me! In my mind, you can draw a straight line from Graham over Buffett to Greenblatt – he really pushed value investing to the next level.

[txitxo]

 

5. "Quantitative value investing", Gray & Carlisle. Best recent reference on mechanical investing.

 

I'm looking forward to reading this eventually.  I've been sort of too cheap to buy it thus far, with tons of other books in my library to be read.  Did you see they are launching some ETFs?  I like the turnkey analyst site very much.

 

Well, I don't follow their strategies exactly, I don't know how an ETF will do, specially if it starts getting big. Most of the most interesting companies I find have relatively small volumes. But it is a very interesting compendium of what works and what doesn't. You can use their results to build you own screens or to modify existing ones. They look in detail at the MF performance, and I love their study of Graham's very simple, p/e<10, debt/equity < 50% strategy:

 

"Graham's simple strategy sounds almost too good to be true. Sure, this approach worked in the 50 years prior to 1976, but how has it performed in the age of the personal computer and the Internet, where computing power is a commodity, and access to comprehensive financial information is as close as the browser? We decided to find out. Like Graham, we used a price-to-earnings ratio cutoff of 10, and we included only stocks with a debt-to-equity ratio of less than 50 percent. We also apply his trading rules, selling a stock if it returned 50 percent or had been held in the portfolio for two years[...]Graham's strategy turns $100 invested on January 1, 1976, into $36,354 by December 31, 2011, which represents an average yearly compound rate of return of 17.80 percent—outperforming even Graham's estimate of approximately 15 percent per year "

 

 

 

[ni-co]

I really enjoyed Mohnish Pabrai's book.  Talks a lot about making infrequent and big bets on stocks with little downside and lots of potential upside.  He calls it "heads I win, tails I don't lost too much".  He gives business examples (Indian Motel Owners, Richard Branson), as well as some case studies.  Finally he has a section on other approaches and where to source investments - eg Magic Formula.  He also has a section on Kelly Formula.

 

I would recommend this book as it's a little different to the others - a valuable addition to the investing armoury.

 

 

Yes, Pabrai's book is another great one that provides a more entrepreneurial perspective on investing that very much resonates with me, too. I think he has distanced himself recently from his use of the Kelly Formula saying that as an investor you don't make enough repeated bets to apply Kelly to them. I don't know about that, though. It's clear that you can't apply Kelly slavishly because you can't know your odds. However, it's a great concept to keep in mind when thinking about portfolio diversification. It shows mathematically that Buffett, Greenblatt and Berkowitz are on the right track regarding portfolio diversification. I also enjoyed Edward Thorp's remarks on it in the Hedge Fund Market Wizards book (another really great book, by the way, that almost made it into my top 5 and certainly is in my top 10).

 

For those of you outside the UK, you may not have heard of: "How to get rich, slowly", by John Lee.  Basically it's by a private investor and FT columnist who was the first person, allegedly, to become an "ISA millionaire".  As ISA is a UK savings vehicle where you can invest £15k per year, tax free.  It used to be more like £10k.  If you are a married couple, you can save £30k per year now, and if you know what you are doing, this is an extraordinarily powerful long terms compounding vehicle.

 

John Lee's approach is to look for small and niche companies, with dividends and family ownership.  He believes that the family ownership means that fewer risks are taken, leading to better long term returns.

 

Thanks – put that on my list, too. I read about John Lee in Guy Thomas's "Free Capital" which I enjoyed, too.

[ukvalueinvestment]

What the Kelly formula taught me is that if you are confident you know what you are doing (and you should be, if you're not indexing), 10% is not that big a position.  Kind of gave me comfort that 8-10 stocks is the right amount to hold, and if ever a high quality business comes along that is screamingly cheap (eg AMEX in the 1960s), it's ok to put 20-30% in it.

[Viking]

Three books really got me started and pointed in the right direction:

 

1.) The intelligent Investor - Graham

2.) one Up On Wall Street - Lynch

3.) The Warren Buffett Way - Hagstrom

 

In terms of an enjoyable read (I love history) I have read Reminiscences of a Stock Operator by Lefevre multiple times.

 

In terms of building wealth I have read Rich Dad Poor Dad by Kiyosaki multiple times and it will be on my kids must read list as they get older.

[Kraven]

hmmm am I the only person on this board who like Marty Whitman

 

No, I like him.  His books have some good points, but are written so poorly that I find they detract from the overall message.  His books have so many issues I am not sure where to even begin.  First, each book he writes essentially copies in huge blocks of text from previous books. 

 

He doesn't even bother updating the examples in many cases.  The one I find amusing is that for "use of creative finance in a corporate takeover" his example is one that I'm sure many are very familiar with.  None other than how Leasco Data Processing took over Reliance Insurance in 1968.  Because of course there is no more recent example of creative financing. 

 

His acronyms and defined terms are truly annoying too.  He uses them for everything, yet will continuously define them.  He will sometimes use an acronym, then use the full term later in the same sentence and define it again. 

 

He rants against Graham & Dodd yet attributes to them things that I believe only are discussed in the 1962 edition of Security Analysis.  However, at times he will reference other editions, so there seems to be some cherry picking.

 

All complaints aside, there are some really good nuggets of information in his books, but you have to wade through the sewage to reach them.

[PatientCheetah]

hmmm am I the only person on this board who like Marty Whitman

 

isn't he very similar to Schloss and Graham? very asset focused?

[LC]

Yes, he criticizes the focus on income statement priority of most of Wall Street and focuses on the balance sheet first. I personally think both have faults in equal merit: asset write downs are usually after the fact and can happen unexpectadly the same way earnings can fall off a cliff unexpectadly.

[yadayada]

What the Kelly formula taught me is that if you are confident you know what you are doing (and you should be, if you're not indexing), 10% is not that big a position.  Kind of gave me comfort that 8-10 stocks is the right amount to hold, and if ever a high quality business comes along that is screamingly cheap (eg AMEX in the 1960s), it's ok to put 20-30% in it.

just curious, do you have any of those 20-30% positions at the moment?