The average return an investor gets in the stock market is around 10%. Beating the average index is extremely hard, challenging and almost down right impossible. But if you are up for the challenge and plan to dedicate your professional life to the markets, learning how the greats did it is one of the first steps.
So whether you are a market professional or just a retail investor looking to invest in the markets, reading as many book as you can about investing will give you that incremental leg-up to generating outsized returns. Here is a list of the best investing books that have helped me through my career on Wall Street and in life.
The Intelligent Investor is probably one of the best investing books ever written hands down. Written By Ben Graham in 1949, it has become the bible for value investors across the globe. Even Warren Buffett claimed The Intelligent Investor as the best investment he ever made. “Whatever the cost, it would underscore the truth of Ben’s adage: Price is what you pay, value is what you get. Of all the investments I ever made, buying Ben’s book was the best (except for my purchase of two marriage licenses).”
I have read The Intelligent Investor three times and should probably pick it up for a fourth read. My personal favorite chapters are Mr. Market & Fluctuations (Chapter 8) and The Margin of Safety (Chapter 20). Both of the principles taught in those chapters have served me well and profitably in the public markets.
I recently picked up Red Notice and read the 416 page book in less than 3 days. Red Notice was written by Bill Browder, the CEO and founder of Hermitage Capital Management. Browder was the single largest investor in Russia until 2005 where he invested in illiquid Russian value stocks while delivering outsized returns.
Browder explains how he did on the ground due diligence in Russia, finding stocks that were trading at a 99% discount to any normal peer. While employing an activist strategy combined with a deep value approach, Browder achieved returns in excess of 1,500%.
However, while making a fortune, Browder exposed corrupt Russian Oligarchs, while barley escaping Russia with his life. Others working for Browder were not so lucky. Sergei Magnitsky, Browder’s lawyer ended up getting tortured to death in a Russian prison.
I thoroughly enjoyed Red Notice given the thriller type read and Browder’s focus on extremely undervalued illiquid stocks. Red Notice is a must read for anyone who is interested in global investing in illiquid markets.
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A Land Remembered is one of the best books I have ever read, hands down. In the best-selling novel, Patrick Smith tells the tale of a poor Florida family who rises through the hardship of poverty into one of the wealthiest real estate tycoons in the state.
Despite the novel being a fictional tale, the story provides an excellent history on Florida and mixes real life characters into the story. A tale from rags to riches with deep rooted history, A Land Remembered is not a book you will want to skip out on.
One of the most famous books on value investing but extremely hard to get your hands on. Margin of Safety, written by legendary investor Seth Klarman is a blueprint for successful value investing.
Seth Klarman is one of the greatest investors to ever live and Margin of Safety has gone down as an investing classic. The key lessons learned from Margin of Safety are:
Focus in minimizing risk as opposed to returns
The importance of bottom-up fundamental analysis
The need for discipline to avoid the next hot speculative trend
Emotions and behavioral biases
Confusing speculation with investing
In addition, Klarman explains that investors need to focus on free cash flow and not EPS or EBITDA as depreciation is a real expense and capital expenditures are also extremely real despite them not hitting the income statement.
Despite Margin of Safety selling for over $800/copy, if you are enterprising enough, you might be able to find a PDF copy somewhere on the internet.
Despite being relatively unknown to many investors, The Sleuth Investor is one of the most interesting and compelling investing books I have read. Written by Avner Mandelman the founder and CEO of Giraffe Capital, one of the most successful Canadian investors.
In the book Mandelman explains that an investor cannot just rely on SEC filings, annual reports and press releases. To uncover the best investing opportunities, an investor has to hit the road and perform on the ground due diligence to find a company’s real value.
Using Mandelman's strategies and techniques, you'll learn how to:
Follow the physical movement of a product, either directly or indirectly, and connect it to financial results
Obtain exclusive information from low-level employees to make nearly sure bets
Collect information from a company's clients and suppliers-and use it to make lucrative investments
Integrate legal precautions into your sleuthing
Averaging 15.2% annualized returns through his 33 year career, an investor in Peter Cundill’s fund would have turned a $10,000 investment to over $1 million.
There’s Always Something To Do is a great book for any investor interested in global value investing as the search for stocks in unglamorous areas of the market is where value typically hides.
The books also talks about what makes a successful investor including insatiable curiosity, patience, concentration, attention to detail, independence of thought, humility and skepticism.
“Be prepared to put money into anything, anywhere, provided that the downside is measurable and acceptable and the chances of a good profit appear to be better than 50%. I will not take gambles, but it is part of my job description to be ready to take very carefully calculated risks.” - Peter Cundill
Protect the downside first and the upside will usually take care of itself.
Written by Joseph Frazier Wall, the biography of Andrew Carnegie is a story of rags to richest untold.
From living in poverty in Ireland to becoming one of the richest men in the world, Andrew Carnegie was not only a brilliant industrialist, but a savvy investor who made an untold fortune in the market buying public and private securities.
Recommended first by Charlie Munger, the biography of Andrew Carnegie is an excellent read that explores the mind of of one the greatest businessmen to ever live. Reader beware, this book is massive at over 1,000 pages.
A haunting tale how Germany went into a massive state of hyperinflation that the world has never seen. From being one of the most trusted currencies in the world to the total destruction of the Mark, The Downfall of Money tells the dramatic story of hyperinflation seen over 100 years ago.
This book resonated well with me given the current state of the world including rising inflation, massive debt and federal spending that is frankly out of control. The Downfall of Money is a haunting and chilling lesson on the history of monetary and fiscal policy gone wrong.
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