Three Books for Novice Investors

    I have only been seriously investing for about sixth months now.  I say "seriously" because I have attempted to invest for about 5 years but it looked a lot like this...  So my only successes have been in investing in index funds.  Which If you don't have the time or energy to pick your own investments is the best way to go, in my opinion.  

    Almost all of my "education" has come through reading a handful of books.

The Richest Man In Babylon

    The Richest Man in Babylon comes all the way from the deep dark past of 1920's America.  It is series of stories and parables set in ancient Babylon and designed to teach financial wisdom.  The book stresses discipline and prudence, consistently saving, avoiding debt, not investing in risky ventures etc.  I have to wonder if people in the 1920's had taken his advice if the whole financial mess that followed wouldn't have happened or at least have been diminished.   If you don't feel like buying the book, a free pdf can be found here, which would be the more financially prudent route. ;)

The Intelligent Investor

    The Intelligent Investor is widely considered "the Bible of value investing" and its author Benjamin Graham, the father of that school of investing.  The Intelligent Investor covers bonds and stocks and discusses two different investing styles, the more cautious investor and the enterprising investor.  The book gives solid guidelines for both types of investors.

    The Intelligent Investor also includes one of my favourite illustrations of the stock market, "Mr. Market."  Mr. Market is your wild, over emotional business partner who offers you equity everyday depending on how he feels that day rather than the actual value of the company.  He is vastly unpredictable but rarely accurate.  The idea that markets are inaccurate flies in the face of academics who claim that markets are efficient (But now I'm just going on a tangent).

One Up On Wall Street

    One Up on Wall Street is probably my favourite of the bunch.  Peter Lynch focuses on the concept that everybody has a "edge" in stock picking.  That just by being a customer, working in a particular industry or going to the shopping mall  you can find potentially profitable investments.  

    Lynch also spends a good number of pages describing the various types of investments that can be made in stock selection, 'Stalwarts' vs. 'fast growers', as well as "asset plays".  Lynch pays particular attention to fast growers where the elusive "ten baggers" can be found, these are stocks which eventually are worth ten times the amount you paid for them.

    One Up on Wall Street is the most modern of these three books and probably reflects more accurately the investing world we live in today.  Plus Lynch writes in a very easy to read and entertaining read.  If you had to pick only one of these to read I would most highly suggest One Up on Wall Street.  You can pick it up at the Play Store or a hard copy using the usual resources.