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

[ukvalueinvestment]

No, and I never have.  I like to keep it simple - around 10% each.  I am watching the Dominos Pizza franchise in Poland.  One day I may swing big at that.

[returnonmycapital]

Snowball

The Intelligent Investor

Buffett Letters 1957 - Present (read each and every word)

The Outsiders: Eight Conventional CEOs

Made in America - Sam Walton

How to Win Friends and Influence People - Dale Carnegie

 

That's six!

 

Great list. I preferred Lowenstein's book to Schroeder's, but whatever. I would add "The New Buffettology." Dodgy author, maybe, but she understands Buffett's process.

[Uccmal]

All mentioned at some point

 

David Dreman - Contrarian Investment....  - very data driven.  Great study on market psychology as well.  Helped me form the cornerstone of my philosophy.

 

Lynch - One up on wall street - great starter book

 

Lowemstein - Making of.... 

 

Smowball - deep insight into what Buffett does and how he does it in between the fluff. 

 

Intelligent Investor/ security Analysis

 

I took a hack at Marty Whitman and found him incomprehensible. 

[jay21]

I do not think Snowball is that great, especially as an investment book. However, the one thing I did get out of it is how many personal relationships Warren has with top CEOs.  It made me rethink how well I can possibly know someone just through internet research and how much of an informational advantage other investors have over management assessments. 

 

It also makes me think I should have swung harder on JPM during the Whale fiasco given Warren's seal of approval on Jamie compounded with the fact he knew him since the 90s.  It was probably a bigger vote of confidence than I realized.

[hyten1]

all good picks for me More than you know was very interesting

 

http://www.amazon.com/More-Than-You-Know-Unconventional/dp/0231143729/ref=sr_1_2?ie=UTF8&qid=1401807338&sr=8-2&keywords=more+than+you+know

[Uccmal]

I do not think Snowball is that great, especially as an investment book. However, the one thing I did get out of it is how many personal relationships Warren has with top CEOs.  It made me rethink how well I can possibly know someone just through internet research and how much of an informational advantage other investors have over management assessments. 

 

 

I loved the detail on how he worked the cocao beans, came to invest with the pritzkers rather than taking the opposite side.  Alice did an enormous amount of research into his deals and relationships that is lacking in all the buffett "how to books".

[rukawa]

For me its:

 

1. Devil Take the Hindmost

2. Snowball

3. You too can be a Stock Market Genius

[kiwing100]

All mentioned at some point

 

David Dreman - Contrarian Investment....  - very data driven.  Great study on market psychology as well.  Helped me form the cornerstone of my philosophy.

 

Lynch - One up on wall street - great starter book

 

Lowemstein - Making of.... 

 

Smowball - deep insight into what Buffett does and how he does it in between the fluff. 

 

Intelligent Investor/ security Analysis

 

I took a hack at Marty Whitman and found him incomprehensible. 

 

 

 

Whitman is certainly difficult to read and to understand initially.  Definitely not for the beginner.  I have read a few of his books.

 

First read Value Investing when just starting out and totally didn't understand it at the time - it actually left me confused.

 

After about 4-5 years of learning and practicing value investing I read The Aggressive Conservative Investor - I believe that I actually understood what he meant - it was applying what he said with the practical experience, and observations of goings on in the public equity market, and management actions that made it clear.  He highlights how the financial markets really works by highlighting the different vested interests and perspectives of various market participants - I can comment on this because I previously was involved on both the institutional sell side and institutional buy side. I am also a chartered accountant which did help.

 

His book on Distressed Investing is also insightful in the area of distressed debt if that is an area of interest to you.

 

His most recent book "Modern Security Analysis" summarises and does repeat the points made in the earlier 2 books about investing in public equity markets.  Notwithstanding the dated examples, there are some important key points there to add to your investing framework if you are willing to invest the time to really understand how investing and financing works in the real world.

 

 

 

[NormR]

James Montier's collections ...

 

Behavioural Investing

and

Value Investing

 

are both good for those going beyond the top 5.

[oddballstocks]

I do not think Snowball is that great, especially as an investment book. However, the one thing I did get out of it is how many personal relationships Warren has with top CEOs.  It made me rethink how well I can possibly know someone just through internet research and how much of an informational advantage other investors have over management assessments. 

 

It also makes me think I should have swung harder on JPM during the Whale fiasco given Warren's seal of approval on Jamie compounded with the fact he knew him since the 90s.  It was probably a bigger vote of confidence than I realized.

 

Investing is no different than any other career path, it's not what you know but who you know.  Many things are discussed on the phone or in person which never appear online.  Picking up the phone is very underrated, it takes longer than reading but I think it's worth it.

[crastogi]

 

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 "

 

In their approach they "clean" their investable universe by eliminating questionable stocks (bad accrauls, Z score, beneish score, etc)  It is a little hard for a small  investor like me for replicate as it requires a sophisticated database and a ton of programming to trim the universe. 

[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 "

 

In their approach they "clean" their investable universe by eliminating questionable stocks (bad accrauls, Z score, beneish score, etc)  It is a little hard for a small  investor like me for replicate as it requires a sophisticated database and a ton of programming to trim the universe.

 

  I strongly recommend that you only use value-based screens. If you play long enough with the data, you will find some weird combination that worked in the past but will disappear as soon as you try it. Value investing has worked for 80 years.

 

So pick your parameters. You still have to do your due diligence, make sure than the numbers in the screener are correct, that they are truly representative, that there is nothing fishy about the company or management which doesn't show up in the numbers. Buy at least 30 stocks per year as high in the list as you can, keep the winners for 1Y+1 day (so you pay long term tax rates) and sell the losers at 1Y-1day (short term tax loss). You should easily beat the index (unless you investing 100M)

 

[randomep]

 

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 "

 

In their approach they "clean" their investable universe by eliminating questionable stocks (bad accrauls, Z score, beneish score, etc)  It is a little hard for a small  investor like me for replicate as it requires a sophisticated database and a ton of programming to trim the universe.

 

crastogi, I think you got the idea. I understand Buffett when he said finding stocks is easier now because information is much more readily available. And as the above quote points out, the market hasn't gotten that efficient. The key is how to process that information.

 

I am from a tech background and I have applied some of my software skills to automatically process financial information. But I don't think it is "a ton of programming", I think it is a lot of very creative programming.

 

The world has I estimate 60,000-80,000 common stock tickers that we can easily get information for. And we can also buy them easily.

 

Anyone else do programming to mine stocks?

[PatientCheetah]

 

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 "

 

In their approach they "clean" their investable universe by eliminating questionable stocks (bad accrauls, Z score, beneish score, etc)  It is a little hard for a small  investor like me for replicate as it requires a sophisticated database and a ton of programming to trim the universe.

 

crastogi, I think you got the idea. I understand Buffett when he said finding stocks is easier now because information is much more readily available. And as the above quote points out, the market hasn't gotten that efficient. The key is how to process that information.

 

I am from a tech background and I have applied some of my software skills to automatically process financial information. But I don't think it is "a ton of programming", I think it is a lot of very creative programming.

 

The world has I estimate 60,000-80,000 common stock tickers that we can easily get information for. And we can also buy them easily.

 

Anyone else do programming to mine stocks?

 

indirectly through portfolio123.com - easy platform to play around with, like you said, creativity/ideas are the keys. its universe is much smaller - mostly US and Canadian stocks. out of curiosity, where do you get your fundamental data?

[yadayada]

what about searching for keywords, and filter from there? I think with 10k wizard you can do that. It costs you a managable amount.

 

The thing is, the most mispriced stocks are usually not found by looking at low PE ratio's or book values. It is often the more intangible story that makes it. Especially with special situations, so searching for certain keywords would be better. You cannot find most of those 'you can be a stockmarket genius' ideas by running stockscreeners.

 

There are probably some amazing mispriced opportunities out there between those 60-80k stocks, where everything lines up perfectly, and where there is like 200% upside in the near term with very little risk (based on public info ofcourse).

 

 

[RhubarbXIV]

In my earlier post I forgot to mention:

 

Wealth of Nations by Adam Smith

 

Kind of blew my mind considering when it was written and how good his thought process was re: capitalism, specialization and the implicit effects of good capital stewardship. Not just another old philosophy book. Seriously, more folks need to give it a chance.

[Rainforesthiker]

My 5 Books would be:

1)  Buffett - The Making of an American Capitalist:  started it all for me.  Weaves in Buffett's investing philosophy in a great story

2)  The Intelligent Investor;  (btw "The Redsicovered Benjamin Graham" by Janet Lowe is also very good)

3)  The Most Important Thing

4)  The 5 Rules of Successful Stock Investing by Morningstar:  cheesy title, great book

5)  Essays of Warren Buffett

 

Also any books that discuss investor psychology and corresponding explanations of market inefficiency are worthwhile.

[crastogi]

 

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 "

 

In their approach they "clean" their investable universe by eliminating questionable stocks (bad accrauls, Z score, beneish score, etc)  It is a little hard for a small  investor like me for replicate as it requires a sophisticated database and a ton of programming to trim the universe.

 

crastogi, I think you got the idea. I understand Buffett when he said finding stocks is easier now because information is much more readily available. And as the above quote points out, the market hasn't gotten that efficient. The key is how to process that information.

 

I am from a tech background and I have applied some of my software skills to automatically process financial information. But I don't think it is "a ton of programming", I think it is a lot of very creative programming.

 

The world has I estimate 60,000-80,000 common stock tickers that we can easily get information for. And we can also buy them easily.

 

Anyone else do programming to mine stocks?

 

indirectly through portfolio123.com - easy platform to play around with, like you said, creativity/ideas are the keys. its universe is much smaller - mostly US and Canadian stocks. out of curiosity, where do you get your fundamental data?

 

Txitxo/ PatientCheetah - Thanks for the input.  I signed up for the basic screening package on P123.  I am happy with around 5-6000 stock universe.  It looks like it can query the S&P compustat database and also define custom formula's 

 

In the book - pg 223 gives a summary of "cleaning" the universe.  Have you taken a crack at defining those in P123? I have to do some research to see if all the variables are available>  If you have a head start, it would be great to compare notes

[thefatbaboon]

In my earlier post I forgot to mention:

 

Wealth of Nations by Adam Smith

 

Kind of blew my mind considering when it was written and how good his thought process was re: capitalism, specialization and the implicit effects of good capital stewardship. Not just another old philosophy book. Seriously, more folks need to give it a chance.

 

Agree!  Amazing book.

[giofranchi]

1) Autobiography + Poor Richard by Ben Franklin

2) The Richest Man in Babylon by George S. Clason

3) Economic Articles And Correspondence Investment And Editorial by John Maynard Keynes

4) Berkshire Hathaway Letters To Shareholders 1965-2012 + The Intelligent Investor

5) Fairfax Financial Letters to Shareholders

6) Poor Charlie’s Almanack by Charles Munger

7) Margin Of Safety by Seth Klarman

8 ) The Most Important Thing by Howard Marks

 

I would add:

 

9) How To Read A Financial Report by John A. Tracy (the best guide to understand how the balance sheet, the income statement, and the cash-flow statement are linked together, that I know of)

10) Accounting For Value by Stephen Penman (a great book on valuation)

11) Reminiscences of a Stock Operator by Edwin Lefèvre (such a fun to read! For the trader that is inside all of us!)

12) Assorted biographies of great entrepreneurs

 

Hey! What was the title of this thread?! ;D ;D

 

Gio

[thepupil]

11) Reminiscences of a Stock Operator by Edwin Lefèvre (such a fun to read! For the trader that is inside all of us!)

 

Finally! I was waiting for this to be mentioned. I love this book, even if I don't buy Anaconda Copper when the ticker tape looks good.

 

It's so entertaining to read about how things used to be done, how the big operators would squeeze each other, how much margin leverage would be used and Jesse Livermore (or whatever the guy's name in the book was) would go bankrupt and then bring himself back.

 

Would also recommend The Great Game for entertaining Wall Street history. You can read about a very bold attempt to corner the world gold market, all kinds of orchestrated short squeezes, stealth stock issuances to prevent takeovers, etc.

 

http://www.amazon.com/The-Great-Game-Emergence-1653-2000/dp/0684832879

 

Don't have much to add to the investing books discussion, other than I actually don't think Margin of Safety is all that great or that it helped at all with the practice of investing. Maybe I need to reread it, since it gets so much love here. I liked Marty Whitman, so clearly I'm the weird one.

 

 

[giofranchi]

Don't have much to add to the investing books discussion, other than I actually don't think Margin of Safety is all that great or that it helped at all with the practice of investing.

 

Well, Margin of Safety taught me the importance of always leaving some room to average down, when I start a position in a public company. And I don’t remember to have seen this discussed in any other book that I am aware of… probably I am mistaken, but Margin of Safety surely is the place where I first encountered this imo very important idea. Through the years I have greatly benefitted from it, and any book with at least one idea we can truly benefit from is worth mentioning! ;)

 

Gio

 

[giofranchi]

Another book I would surely recommend is “Fooling Some Of The People All Of The Time” by David Einhorn.

 

Gio

 

[SharperDingaan]

These will only appeal to engineers, but are well worth the time...

 

Avinash Dixit, Barry Nalebuff: Game Theory.

Taleb: The Black Swan, Anti-Fragile

 

SD

[karthikpm]

These will only appeal to engineers, but are well worth the time...

 

Avinash Dixit, Barry Nalebuff: Game Theory.

Taleb: The Black Swan, Anti-Fragile

 

SD

 

I am no engineer, but loved those books. I would also add "Fooled by Randomness " by Taleb

 

Another one of my favorites is " Against the gods: the remarkable story of risk " by Peter Bernstein.