Many of my email subscribers had asked me for stock tips. In fact, I don’t have any stock tips for you but here is a list of reading tips!

When I replied most of your request on how to invest in stocks, and recommended value investing, I would get another request – “Which book should I read on value investing?”

Emmm… so here is a list for you to get started.

About Value Investing

If you want to make money in today’s market, the opportunities are endless. But the one strategy that has truly proven itself over the years, is value investing. In my opinion, this is the safest way to invest in stocks. It’s defined by the policy of choosing stocks that can be exchanged for a price lower than their intrinsic values. The value investors think the market over-reacts to good and bad news, which results in the rise and fall of stock prices that do not always coincide with the company’s long-term prospects. The winning strategy here is to buy good stocks that is under-valued.

Lots of books are famous for focusing on this particular concept. Here are the top ten books that a value investor must read.

1. The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition)

By – Benjamin Graham (Author), Jason Zweig (Author), Warren E. Buffett (Collaborator)
Published – February 21, 2006

This classic book is the revised version of Benjamin Graham’s (The father of value investing) timeless wonder “The Intelligent Investor”. The revised version, while protecting the integrity of Graham’s original text, includes updated analysis by renowned financial journalist Jason Zweig. His perspective corresponds to the complexities of today’s stock market & establishes a relation between Graham’s examples and contemporary financial problems.

  • Amazon’s #1 best seller in economics and finance category
  • Contains extensive research, charts, tables and commentary that updates the book to the present years
  • Recognized by Warren Buffet as “By far the best book on investing ever written.”

The Harper Business Essentials edition of The Intelligent Investor is the most vital book you will ever get on how to achieve your financial goals.

2. Security Analysis, Sixth Edition (Leather Bound Edition)

By – Benjamin Graham (Author), David Dodd (Author), Seth Klarman (Author)
Published – October 10, 2008

Security Analysis is considered to be one of the most influential books on value investing ever written. This book has withstood the test of time across a variety of demands, market conditions & asset classes. The sixth edition shows that the principles and techniques of investment introduced by Graham and Dodd are still the best ones even in today’s dynamic market.

  • This book is the reissued modern version of the classic 2nd edition
  • A total of 10 chapters from the original book has been deleted
  • To compensate the loss for the missing chapters the publisher has attached a CD which contains the original 2nd edition in pdf format.

Security Analysis is such a phenomenal book, that in many ways this book written in 1940 does a better job explaining 21st century value investing than most of the books written nowaday.

3.Value Investing: From Graham to Buffett and Beyond

By – Bruce C. N. Greenwald (Author), Judd Kahn (Author), Paul D. Sonkin (Author), Michael van Biema (Author)
Published – January 26, 2004

Bruce Greenwald, one of the leading authorities and a popular teacher of value investing, along with some colleagues has written this book explaining the fundamental principles of value investing; the one investment technique that is applicable to all places and time.

  • Explains the new theories of value investing as proposed by the most renowned investors in the market.
  • Effectively relates the traditional Graham & Dodd style of value investing to what works today.
  • The book brings value investing to the modern stock market.

On a review of this book, the Financial Times quoted- “This book deserves a place on every serious investor’s shelf.”

4. Contrarian Investment Strategies – The Classic Edition

By – David Dreman
Published – May 18, 1998

David Dreman’s theory of Contrarian investment has been proven successful for many years running. The book focuses on how to outperform your opponent money managers and benefit from potential Wall Street panics. His strategies are based on a single fundamental psychological insight, that is “investors overreact”.

One of the major problems of the value investors is that they continuously overvalue the so called best companies and underestimates the so called worst stocks. Dreman teaches you to make the best out of the panics of the stock market. From this book you’ll learn:

  • How contrarian investment will offer you more protection & deliver superior returns
  • Crisis, panic, and even market downturns are most favorable for the contrarian investor’s
  • How initial public offerings will guarantee your loss

David Dreman’s revolutionary techniques should benefit both laymen and professionals through its irrefutable statistics and cutting edge research.

5. The Little Book of Value Investing

By – Christopher H. Browne (Author), Roger Lowenstein (Foreword)
Published – September 22, 2006

In his book “The Little Book of value investing”, Christopher Browne, the disciple of Benjamin Graham, shows how to successfully buy bargain stocks around the world using his wealth building strategy. He has used the most prominent investors (Benjamin Graham, Warren Buffett) as examples to explain value investing in the best possible manner.

In this book you’ll get:

  • Many examples to support Browne’s theory.
  • How to get the best return from stocks which have fallen out of favor.

Some very interesting chapters like “Buy Stocks like Steaks…On Sale”,”Around the World with 80 Stocks”, “Sifting out the Fool’s Gold” which makes the book a lot more interesting to read.

6. The Little Book That Beats the Market

By – Joel Greenblatt (Author), Andrew Tobias (Foreword)
Published – November 19, 2005

If you pass two hours with “The Little Book That Beats the Market”, it will teach you how to double the investment’s return in a better way than 2 years in MBA school. Joel Greenblatt, the founder of Gotham Capital in this book, has very effectively implied the basic formulas for successful investing.

In this book he has:

  • Provided a magic formula which is very easy to apply & and will make buying good stocks at a cheap price automatic.
  • Used very simple language. The formulas are explained using 6th grade mathematics.
  • Explained why success eludes almost all investors and why this formula will keep working even when everyone knows it.

Moreover, you’ll learn how to use this amazing low risk technique to remain one step ahead of the market as well as that of the professional managers.

7. You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits

By – Joel Greenblatt (Author)
Published – February 25, 1999

In this book, the renowned fund manager Joel Greenblatt will teach you how to beat the Dow comprehensively. You will get access to the investment opportunities & uncharted areas that most of the expert company managers miss regularly.

The reasons behind its popularity are:

  • The book is filled with case studies, important background information, and all the tools you’ll need to become a stock market genius.
  • Has the simplest explanation for special situations investing involving unusual securities.
  • Many precise measurements of security analysis are done in it.

From a layman’s point of view this is probably one of the best books on value investing.

8. The Warren Buffett Way, Second Edition

By – Robert G. Hagstrom
Published – October 4, 2005

This is the book that introduced Warren Buffett to the world, the most successful investor of all time. Since its publication, it remained 21 weeks straight in the New York Times Hardcover notification list and sold more than one million copies.

But how did this legend remain on top for more than a decade in this fluctuating market? This is when the second edition of the book comes in handy. It explains-

  • Buffett’s numerous investments and accomplishments over the past ten years.
  • The timeless and highly successful investment strategies and techniques he has always used to come out as a market winner.
  • Buffett’s basic tenets of investing with relevant and up to date examples.

This edition is a completely revised and updated look of the first edition. This book will help you to understand Buffett’s techniques even better.

9. Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor

By – Seth A. Klarman (Author)
Published – October 1, 1991

Klarman’s ‘Margin of Safety’ will show you why value investing has succeeded for so many years while other approaches have failed.

  • Clear and concise writing, no fluff.
  • Lots and lots of illustrative examples.
  • Very clear explanation of the basic concept of value investing and a margin of safety.
  • Useful methods for researching and evaluating a business.

If Klarman’s theories are followed, it will give the investors strong possibility of investment success with limited risk.

10. Value Investing: A Balanced Approach

By – Martin J. Whitman
Published – September 22, 2000

This is an excellent book written by Marty Whitman, an outstanding investor. His writings reflect on his vast experience. With thorough explanations & guidelines, Whitman provides the investors with the tools required to fully capitalize on the market conditions. After reading this book you’ll be able to see the potential of the temporary troubled companies.

  • This is an essential book in today’s turbulent market.
  • The book explains how Wall Street really works. So, it is very helpful for main street business people.
  • Decades of experience of the writer makes the book even more compelling.

New investors on many occasions, are lured by the thought of earning millions at once. This causes them to fall prey to many infatuations of Wall Street. The countless strategies they implement in most cases, do not offer any sort of dividend in the future. Value investing is probably the safest way to invest in the market with very limited downside & high degree of certainty.

Warren Buffett rightly pointed out: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”.

The aforementioned books will help you to understand value investing better. So, order your copy today!

References:
1. Stock picking
2. Value Stock Guide 
3. 12 Value Stocks

 


KCLau
KCLau

Personal finance author and trainer

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