Time for a little reading

Q: What are the best books for beginning investors?

A: When Warren Buffett and his top stock pickers were recently asked how they spend their workdays, they revealed that their primary activity is reading.

For beginners, my favorite investing book is One Up on Wall Street by Peter Lynch, one of the most successful mutual fund managers of all time. It does a fantastic job of explaining the basics of stock analysis, the difference between investing and speculating and how to use your own knowledge to find investments and evaluate stocks. One of the things that makes this book unusual is that it is specifically geared toward smaller investors and the inherent advantages they have over hedge fund managers and other professionals. After that, I’d suggest The Intelligent Investor by Benjamin Graham, Warren Buffett’s mentor. While this isn’t the newest book on the subject (originally published in 1949), it has been updated and revised several times and is still the best discussion of value investing I’ve ever come across. Investing can get rather emotional, which can be hazardous to your long-term returns; this book does a great job of teaching people how to consistently approach it rationally.

Once you’ve gleaned the basics from these two books, don’t stop. There is much more to learn about investing. Even after 15 years, it amazes me how much I continue to discover daily.