Must-read books for in­vestors

Finweek English Edition - - INVEST DIY - BY SI­MON BROWN

Ilove read­ing and gen­er­ally my aim is to read 100 books a year – 50 fic­tion and 50 non-fic­tion ti­tles. In truth, it has been decades since I man­aged to fin­ish 100 in a year, but I still read as much as pos­si­ble. This week I want to sug­gest six books for traders and in­vestors. I could com­pile a much longer list, but this is a great place to start in or­der to grow your knowl­edge of trad­ing and in­vest­ing.

1.

BY PETER LYNCH Pub­lished back in the 1980s, it re­mains as rel­e­vant to­day as ever. Lynch writes in a con­ver­sa­tional tone us­ing an easy-tounder­stand style, and his sug­ges­tions for how to se­lect win­ning stocks are prac­ti­cal and easy to in­te­grate into our ex­ist­ing in­vest­ment prac­tices. BY FRANCO BUSETTI This is a more ad­vanced read than One Up on Wall Street, but it is well worth it. Since this book was writ­ten for the lo­cal mar­ket, all the ex­am­ples used are com­pa­nies that we know and un­der­stand. What I re­ally like about this book is that Busetti pokes a lot of holes in con­ven­tional in­vest­ing wis­dom. I es­pe­cially liked the chap­ter in which he pulls apart econ­o­mists’ abil­ity to pre­dict the fu­ture. Us­ing the rand/ US dol­lar ex­change rate over a decade, he shows that pro­jec­tions for fu­ture lev­els of the cur­rency were sim­ply never right, not once. Now, sure, he was sock­ing it to econ­o­mists, but the the­ory ap­plies to any­body try­ing to pre­dict the fu­ture. BY BEN­JAMIN GRAHAM This is the num­ber one book for many, as Graham is the fa­ther of value in­vest­ing and the man who got War­ren Buf­fett in­ter­ested in stock mar­kets. That said, this book is a tough read but the au­thor’s for­mu­las for value in­vest­ing re­main valid. But I must warn read­ers that last year I scoured the JSE look­ing for coun­ters that met one of the two for­mu­las pre­sented by Graham for true value stocks, and out of the en­tire uni­verse of JSE stocks not one met his cri­te­ria. BY PHILIP A. FISHER While War­ren Buf­fett started life as a value in­vestor, he is now a Fisher dis­ci­ple and a fol­lower of this book. This is a great prac­ti­cal ti­tle that re­ally delves into the process of f ind­ing awe­some stocks to in­vest in. Again, like Lynch, Fisher uses prac­ti­cal the­o­ries that do re­quire an ad­vanced de­gree to un­der­stand and this book prob­a­bly helped my in­vest­ing more than any other I have read. This is one ti­tle I would rec­om­mend for traders. More t han a ny t hing, t r ad­ing i s about psy­chol­ogy and no­body un­der­stands and ex­plains this bet­ter than Dou­glas. This is another book that’s not easy to read – there are no pic­tures or funny anec­dotes – but it re­mains the most i mpor­tant book on t rad­ing I have ever read. I reread this book ev­ery De­cem­ber hol­i­day and have done so since it was pub­lished back in 2001. BY MICHAEL COVEL This is another book for traders. I am a f irm be­liever in trad­ing the trend and while this book doesn’t give any sys­tems on how to do this, it does make the case for trend trad­ing with many ex­am­ples. It also ex­plains the short­com­ings the con­cept has.

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