By checking out one or all of these titles, you can get, from some of the masters of the investing world, the foundational knowledge you need to make prudent, rational, and successful investment decisions.
When you’re just starting out as DIY investor, there is nothing better than some time-tested, sound advice from some of the legends of Wall Street. Here are five titles that can help you establish a sound foundational approach to evaluating securities, funds, and even life goals:
Touted by Warrant Buffet as the “best book ever written on investing,” The Intelligent Investor offers an introduction to value investing, a strategy based on buying underpriced securities based on fundamental analysis. Benjamin Graham introduces the philosophy and basic analysis behind value investing in a way that is accessible to everyone, while stressing the patience one needs to ride the ups and downs of the markets. First published in 1949, Graham’s “Bible of Wall Street” was lasted revised in 2006.
Vanguard founder John C. Bogle preaches the virtues of using low-cost index funds to diversify portfolios, lower risk, and realize rational returns over the long haul. Eschewing attempts at timing the markets or the risk of single security investments, Bogle presents a passive approach to investing that allows the market “to do the work for you.”
Written by Burton G. Malkiel, whose many accolades include Professor of Economics Emeritus at Princeton and Dean of the Yale School of Management, A Random Walk Down Wall Street is another classic work that espouses fundamental analysis (examining the a company’s business) over technical analysis (examining the historic movement of stock princes) for investment decisions. For the average investor, he argues, like Bogle, the best investment strategy is utilizing a passive, index fund driven approach vs. active investing.
Peter Lynch is one of the most successful investors in Wall Street history having guided the Fidelity Magellan Fund to the title of best performing fund from 1977 to 1990. In One Up On Wall Street, Lynch speaks directly to the amateur investor arguing that many great investment opportunities are right under your nose in companies you interact with everyday. Surprised at how long the lines are for chicken nuggets every lunch hour? Invest in Chick-fil-a. Seeing Xfinity trucks pop up for appointments at every driveway in your neighborhood? Invest in Comcast. As long as the companies pass some basic fundamental analysis, many investors can beat the so-called Wall Street gurus by simply sticking to what he or she knows.
The newest entry in the list is written by Ray Dalio the hedge fund founder and CEO whose All Weather strategy has made Bridgewater not only the largest hedge fund in the world but as of 2016 the most profitable in history. In Principles, Dalio outlines the principles that have helped guide his remarkable success in investing, leadership, and even personal relationships and offers the reader a blueprint for how to implement these principles in their own lives. While not as specific in regards to investment strategies as the other titles, Dalio’s work aims to help you achieve any goal you set your mind to.
Extra Credit: Security Analysis
At around $45 and 700 pages, Security Analysis by Benjamin Graham and David Dodd is not for the light-hearted, but if you want the same text that has driven value investors for over 50 years, this is the book for you. Updated with new commentary from the likes of Howard Marks, Bruce Greenwald, and David Abrams, Security Analysis with give you all the tools you need to become the next Warren Buffet.