I had a friend ask me the other day what the best book was for their son who was graduating high school and wanted to learn more about investing. I drew a blank. I used to say the WSJ Guides to Money and Finance but they seem outdated.
Leave a comment with your favorite Investing 101 book…
top 10 investment books
http://beginnersinvest.about.com/cs/newinvestor...
The book that Warren Buffett says is the best ever, written by his teacher:
The Intelligent Investor, by Ben Graham
There's no point reading some patched-together book by a financial journalist when you can start with the words of Ben Graham.
If you wanted to learn how to play golf, who would you take lessons from? A club pro who never made it to the tour, or Tiger Woods?
To the excellent list Jeff cites, I'd add Margin of Safety, by Seth Klarman.
Yes, out of print and selling on eBay for $1,000 or so.
But also available on the Web if you look.
This one is a little big, but it's a great roadmap that you will use forever:
“Investment Analysis and Portfolio Management” by Reilly/Brown
From “What is an Investment?” to “Evaluation Of Portfolio Performance” and CDS (if you plan to be an investment banker, you can deform you career from here). And it's very up to date.
random walk down wall st.
Why Smart People Make Big Money Mistakes and How To Correct Them: Lessons From the New Science of Behavioral Economics by Gary Belsky & Thomas Gilovich. In the words of Pogo, “We have seen the enemy, and he is us.”
Live it up without outliving your money by Paul Merriman.
Excellent research re AA and great graphs; logical presentation. Perfect jump off for your book using MA.
When I started learning about investing, I liked A Random Walk Down Wall Street by Malkiel, and then I moved on to the more advanced topics. To understand the more advanced theories of asset allocation, it is helpful to understand traditional investment theory and some history. The Millionaire Next Door would also be good, since living below your means is a key concept to learn early on, otherwise investing knowledge doesn't help much.
Best: George A. Fonanills & Tom Gentle: The Stock Market Course. John Wiley. 2001
Good Intro: A Khan & V Zuberi: Stock INvesting for Everyone. John Wiley. 1999.
I think investors should start with passive strategies:
The Four Pillars of Investing by William Bernstein
Fail-Safe Investing by Harry Browne
Richest Man in Babylon by George Samuel Clason
before moving on to more active strategies:
Intelligent Investor
Hedge Fund Edge
The Ivy Portfolio
random walk down w.s. like Javier said. he should learn the basics of why it's hard to beat the market before he reads books on beating the market.
no reading is complete without “Reminiscences of a Stock Operator”. If I had to pick one, that would be it.
@Don: Good suggestions!
I agree with Don that beginners need to get the passive core of their portfolio right before that allocate any portion of their portfolio to other ideas. My top recommendation these days is easy:
“Fail-Safe Investing” by Harry Browne for these reasons 1) short book 2) very practical about your relationship to your job, savings and advisors 3) the permanent portfolio allocation offers very good stability and return compared to other static allocations. This last point is very important because I would rather not give any advice than have someone take a big loss after talking to me
I might pick one of these to recommend next depending on the person's interest.
“The Four Pillars of Investing”
“The Only Guide to a Winning Investment Strategy You'll Ever Need”
“Unconventional success”
“The Intelligent Asset Allocator”
“The Black Swan”
For someone who wants to consider putting a portion of their portfolio into hand picked value stocks I would recommend.
“Buffettology”
“The Intelligent Investor”
“Buffett: The Making of an American Capitalist”
“The Market Gurus”
“Security Analysis”
This classic covers the basics on money management and investing for someone just coming out of high school:
“The Only Investment Guide You'll Ever Need” by Andrew Tobias
“The Money Game” by Adam Smith is one of the best – and has stayed that way after trading the markets became my job, too.
Is Dave Swenson's book 101 level reading? I think it could be as it would force the poor kid to look up all sorts of terms if he didn't know them. I am sure Google and Wiki can provide him with all the “truth” needed.
What about Graham and Dodd's “Security Analysis”?
“The Only Investment Guide You Will Ever Need” by Andrew Tobias.
Despite the audacious title, I'd definitely say “The Only Investment Guide You'll Ever Need” by Andrew Tobias. Further personal testimony in this regard in this post from my blog:
http://coveredcallsadvisor.blogspot.com/2009/01...
Dick Davis Dividend: Straight Talk on Making Money from 40 Years on Wall Street:
Simple Wealth, Inevitable Wealth by Nick Murray
Basic Economics by Thomas Sowell
The Autobiography of Benjamin Franklin
The Black Swan by Nassim Taleb
The Millionaire Next Door by T Hanley
Essay by Warren Buffet
Stocks for the Long Run by Jeremy Siegel
Moneyball by Michael Lewis
Washington's Crossing by David Hackett Fisher
Any book by Rob Chernow (House of Morgan and Titan good start)
Wealth and Poverty by George Gilder
Free to Choose by Milton Friedman
Economics in One Lesson by Henry Hazlitt
Atlas Shrugged by Ayn Rand
Human Action by Ludwig von Mises
The Way the World Works by Jude Wanniski
The Forgotten Man by Amity Shales
The Ascent of Money by Nial Ferguson
Rethinking the Great Depression by Gene Smiley
Coach: Lesson on the Game of Life by Michael Lewis
The Panic of 1907 by Bruner and Carr
Outliers by Gladwell
The Road to Serfdom by Hayek
Save the child now. Keep away from anything that starts with Guide, How to, The Only etc.
To be a great investor you need to understand economics, human behavior, and history.
In my opinion, the biggest mistake is to recommend any books specific to individual investing, asset allocation, etc.
Most people cannot apply the information from these books to the real world and is a waste of time for a college graduate.
The Phil Fisher, Bernstein, Swensen, Graham books are best left alone for now.
Leave the financial statement analysis and asset allocation optimization to the professionals.
Just my humble opinion. Hope this helps
I like Benjamin Graham's classic, The Intelligent Investor. I think it is the best book that actually describes the psyche of the investor, and how one can be his own worst enemy. I have given away over a thousand copies of the book on my show.
A new book by Ramit Sethi – I will teach you to be rich – http://www.amazon.com/Will-Teach-You-Be-Rich/dp... – is a pretty good introduction to investing and personal finance for the younger generation – it takes many of the ideas from the Automatic Millionaire and from Swensen and explains it in a concise and understandable format.
I think it is an excellent starter book for a high school graduate / student.
What highschool kid is going to want to read?? Tell him to checkout INO TV: http://tv.ino.com/ There are over 150 experts and 500 seminars on trading, investing, money management, saving, etc etc.
reminisces of a stock operator is a great historic read
Brad,
Good idea. Can you recommend any of the 150 experts/500 seminars as suitable to introduce a young person to investing?
Don
Go through Shiller's Econ 252: http://oyc.yale.edu/economics/financial-markets...
“Wall Street Words” was what I used 15 years ago. The first half is definitions and the second half is application. Very basic, but a good starting point nonetheless.
Peter Lynch “One Up On Wall Street” and “Beat The Street”. Best intros to stock picking.
Tobias books tough to beat for Investing 101 needs…
The following 3 books are worth more than my 9 years of college education:
Winner Take All by William Gallacher
Alchemy of Finance by George Soros
Fooled by Randomness by Nassim Taleb
The 3 best intro to investing books are (in combination)
1. Bruce Greenwald's Value Investing
2. Siegel's Stocks for the Long Run
3. Peter Lynch's One Up On Wall St
The combination has the theory behind long-term dominance for equities, the general what-works perspective on equities, and Lynch's decade worth of notable examples.
ok
For a young person just starting out in equity investments, I feel that there is no finer work available to date than: Khoury, S.J., Pal, P., Zhou, C., and Karayan, J. (2003). “Wealth forever: The analytics of stock markets.” River Edge, NJ: World Scientific Publishing Co. Pte. Ltd.
This work not only provides a useful survey of the field, but also offers practical methods and potentially profitable insights.
The Intelligent Investor is the best book ever written on investing.. start there
At least for options, Options For Beginners. But it is an intro, not much more than that. Great for high schoolers and other beginners. NOT for experienced option traders though.
http://www.amazon.com/gp/product/B001DKJOEO
Investors Quotient – Bernstein
Secrets for profiting in Bull and Bear Markets – Weinstein
All about Market Timing -Masonson
Investors Quotient – Bernstein
Secrets for profiting in Bull and Bear Markets – Weinstein
All about Market Timing -Masonson