Read 'em and reap.
In a recent Investor Clinic video, I asked viewers to send in a few comments about their favourite investing books. Little did I know that some of you apparently spend every waking hour studying up on efficient market theory and the stock-picking secrets of Warren Buffett and Benjamin Graham.
People, get a life! The truth is, I'd always suspected that my readers know more than I do, and now I have proof. So today, in a selfless act of deference, I'm turning the column over to you, the readers.
Below, chosen by you and in your own words (edited for clarity and brevity), are some of the best investing books ever written. In keeping with Investor Clinic's mission to promote investor education, my hope is that readers will discover a title or two here that they will find enlightening.
Knowledge is your best friend as an investor. Happy reading.
The very best and most thorough book I have read on investing is The Four Pillars of Investing, by William Bernstein. It is a very long but extremely compelling book on the benefits of index investing. The sheer amount of information in this book slams home every one of Mr. Bernstein's arguments. His new book, The Investor's Manifesto, is a pretty good book, too.
The Richest Man In Babylon, by George Clason, is another great book. It is very similar in style to The Wealthy Barber in that it teaches its lesson in a series of short stories. It is a very entertaining, insightful, and enriching read, not just the first time you read it, but every time you pick it up.
- Jeremy Christon, Scarborough, Ont.
My favourite by far is the 1923 book Reminiscences of a Stock Operator, by Edwin Lefèvre. His real world advice is as relevant today as it was in 1923. Layman-written, it will appeal to any modern trader and could save them a lot of money if you incorporate his lessons.
- Robert Leavitt, Ajax, Ont.
(Editor's note: Reminiscences of a Stock Operator, considered an investing classic, is the fictionalized biography of legendary Wall Street speculator Jesse Livermore.)
I generally encourage people not to read newspapers, magazines, or other time-sensitive sources. These are more likely to be impediments to meaningful financial decision-making. My recommended reading list includes:
The Big Investment Lie by Michael Edesess: Demonstrates that active management does nothing to add value and that performance is random.
A Random Walk Down Wall Street, by Burton Malkiel: A great primer on stocks, bonds and mutual funds, as well as market efficiency.
The Little Book of Common Sense Investing, by John Bogle: Demonstrates the extreme importance of cost and tax efficiency.
The Naked Investor, by John Reynolds: A series of case studies that show how Canadian regulators and self-regulatory organizations are not protecting ordinary investors.
The Millionaire Next Door, by Thomas Stanley: Research into how millionaires think and how they got where they are today.
The Professional Financial Advisor II, by John De Goey: A frank discussion on the need for the financial services industry to transform itself into a profession.
- John De Goey, vice-president Burgeonvest Bick Securities, Toronto.
(Editor's note: Under the Investor Clinic bylaws, readers who take the time to write in are permitted to engage in shameless self-promotion.)
The revised The Intelligent Investor, by Benjamin Graham, with the chapter-by-chapter commentary by Jason Zweig, is among the greatest investing books ever. It showed me that the basics of investing haven't changed much at all over the last 100 years and that fads, cons, frauds and fees are and always have been the investor's enemies. It also ingrained a sense that investing isn't supposed to be sexy, and left me with what I feel is a solid path to prosperity.
- Chris Hylarides, Toronto.
The Investment Zoo, by fund manager Stephen Jarislowsky, is the best Canadian general investment book ever. There's everything in there you'd ever want to learn about investing. The material on which stocks to buy (and not buy) is great, as well as the ideas on investment errors and stock analysis. The only problem is there's no index."
- Tom Connolly, publisher, Connolly Report newsletter, Kingston, Ont.
(Editor's note: Mr. Connolly is such a fan of the book that he created his own index, which is posted on his website dividendgrowth.ca.)
For investors wanting to get into the guts of individual companies, and investing in individual stocks, I recommend any of Robert Hagstrom's books ( The Warren Buffett Way being one), Lawrence Cunningham's How to Think Like Benjamin Graham and Invest Like Warren Buffett,The Essays of Warren Buffett, compiled by Mr. Cunningham, and a great little Australian book called A Wonderful Company at a Fair Price, by Brian McNiven.
My favourite book on accounting tricks is Howard Schilit's Financial Shenanigans. For a book to read during a bull market (to temper the bulls somewhat) I recommend Michael O'Higgins' Beating the Dow with Bonds. This is the book that really saved my portfolio prior to the 2000/2001 tech crash. And it sure taught me a lot about bonds.
Burton Malkiel's A Random Walk Down Wall Street is a must. But having said that, his latest book, The Random Walk Guide to Investing, is one that I recommend more highly for newbies. It's short. And it is written with a more readable voice than his full Random Walk editions.
And for an overall spending philosophy (you can't invest what's already spent) I really got a kick out of Thomas Stanley's latest book, Stop Acting Rich, where he suggests that most wannabe rich people spend more than the average rich person does, sacrificing their potential to grow wealth.
- Andrew Hallam, Singapore.
Thank you to all who contributed. See you at the library.
Got a question for John Heinzl? Email him: jheinzl@globeandmail.com
John Heinzl