There have been some great investment books written, but many of the best have been written about the world of stock and equity investing. In fact, my favorite investor of all time was a man named Benjamin Graham, who really pioneered the concept of value investing. Two of his books are in my top three, along with works on Warren Buffet, arguably the most successful investor of all time.
The Intelligent Investor by Benjamin Graham
This book was first published in 1949 and remains my favorite investment book of all time. Several new editions have been published over time, with updated comments; the most recent edition with commentary by Jason Zweig helps bring Graham’s value investing principles into the 21st century.
The Smart Investor teaches important principles about how contrarian value investors should behave. By far the most important lesson in the book is Graham’s margin of safety: he should only buy stocks that are significantly undervalued, so that he has a relatively wide margin of error. Another important lesson he preaches is not to listen to the markets: he makes a very good analogy of a man named Mr. Market who walks into his office every day and asks if he wants to trade with him. Sometimes Mr. Mercado is delusionally optimistic and offers him high prices, which he should consider accepting, while other times Mr. Mercado is very pessimistic and offers him very little; Essentially, Graham is saying that you should value your investments yourself, not trust what the market tells you they’re worth.
Security Analysis by Benjamin Graham and David Dodd
If you’re fairly new to investing, this probably isn’t the book for you. Think of it as a more detailed version of the Smart Investor. However, much more material is offered, including a more detailed section on investing in bonds, as well as talking about being able to invest wisely in speculative stocks. If you’re going to read any book on investing, read the Smart Investor, but once you’ve done that, Security Analysis is worth reading.
The Snowball: Warren Buffett and the Business of Life by Alice Schroeder
Warren Buffett is one of the most successful investors of all time and he is also one of the richest men in the world. This man’s investment approach is worth knowing! Alice Schroeder thoroughly researched Buffett and his investment techniques in writing this book. However, this is largely a biography of Buffett’s career: it has a source of information that is invaluable to investors, but it serves best as an introduction to Buffett. If you want to learn more about Warren Buffett’s investment philosophy, you can visit the Berkshire Hathaway website and read his letter to shareholders: Gold Dust for Value Investors. Although these are my personal favorites, there are plenty of other great investing books to read. Books by Jim Slater, Anthony Bolton, and Charlie Munger are also good for growth and value-oriented investors.