By James Hallon
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Some great investing books have been written, but many of the best have been written about the world of investing in stocks and shares. Indeed, my favourite investor of all time was a man named Benjamin Graham, who really pioneered the concept of value investing. Two of his books make my top three, along with works about 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 favourite investment book of all time. Various new editions have been published over time, with updated commentary- the most recent edition with commentary by Jason Zweig helps bring Grahams value investing principles into the 21st century.
The Intelligent 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 – you should only buy shares that are significantly undervalued, so that you have given yourself a relatively wide margin for error. Another important lesson he preaches is not to listen to markets – he makes a very good analogy of a man named Mr. Market who comes into your office every day and ask if you want to trade with him.
Sometimes Mr. Market is deliriously optimistic and offers you high prices, which you should consider accepting, whilst on other times Mr. Market is very pessimistic and offers you very little- essentially Graham is saying you should value your investments yourself, not to rely on what the market tells you they are worth.
Security Analysis by Benjamin Graham and David Dodd
If you are fairly new to investing then this probably isn’t the book for you – think of it as a more in depth version of the Intelligent Investor. However there is a lot more material on offer, including a more detailed section on bond investing, as well as talking about the possibility of intelligently investing in speculative stocks. If you are going to read any book on investing, read the Intelligent Investor, but once you have, Security Analysis is well worth a read.
You should value your investments yourself, not to rely on what the market tells you they are worth
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 put a painstaking amount of research into Buffett and his investment techniques when writing this book. However this is largely a biography of Buffet’s career – it has a fountain of information that is invaluable for investors, but best serves as an introduction to Buffett. If you want to find out about Warren Buffett’s investing philosophy in detail, then you can have a look at the Berkshire Hathaway website and read his letters to shareholders- gold dust for value investors.
Although these are my personal favourites, 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 orientated investors.
See more great book recommendations for finance and investing here