If you had to recommend one book for learning to invest in the stock market, which would it be? That question was put to more than 1,000 veteran investors, who suggested over 200 different books, some of them very little known.
But there was a clear winner. Even so, no single book holds the magic formula for learning to invest. It’s a matter of gathering ideas from different investors, because two investors with very different systems can both achieve excellent results.
The MarketWatch website sorted the answers and ranked the books most often recommended by the investors (in order of votes). Here are the 10 investing books these investors recommended most.
We had already included most of them in our ranking of the 13 best finance and stock market books.
1. The Intelligent Investor
It’s still the book most often recommended by both old hands and young investors on Wall Street. Benjamin Graham, Warren Buffett’s mentor, wrote a long time ago what is still considered the bible of investing. It’s essential reading for any investor who wants to get into the stock market, analyse the real value of companies and avoid many mistakes, such as buying an overvalued stock. Graham is the father of value investing.
2. A Random Walk Down Wall Street
We named this book by Burton G. Malkiel, together with Robert Shiller’s Irrational Exuberance, as the only two books you need to understand the stock market. The popular belief is that experts will always do better than individual investors, and that individuals have no edge in the complex world of the stock market. This book argues the opposite: an individual investor can do as well as a professional, or better. In fact, the statistics back up its message, since individual investors who invest for the long term and with moderate diversification often get better returns than professionals. And there are several logical reasons for that.
3. The Most Important Thing
Written by Howard Marks, it comes in at number 3 among the books the investors recommended most. I haven’t read this one yet.
4. One Up on Wall Street
This book by Peter Lynch is highly recommended. Its premise is that with what you already know, and by keeping your eyes open, you can get ahead of Wall Street. Investment opportunities are everywhere: in the supermarket, in what your children play with, in what your neighbours buy. Sometimes you’re seeing things and picking up information that hasn’t yet reached Wall Street. In other words, you can tell which companies are likely to become big before the professionals in New York discover them.
5. The Little Book of Common Sense Investing
John C. Bogle tries to reduce investing to its simplest form, using index funds or low-cost tracker funds so that instead of picking a few items from the basket, you buy the whole basket and hold it for the long term. In fact, Bogle created the world’s first index fund, so this book essentially aims to spare you the risk of buying individual shares by having you buy a whole sector or group of stocks instead.
6–10
- The Four Pillars of Investing, by William Bernstein
- The Little Book That Beats the Market, by Joel Greenblatt
- Reminiscences of a Stock Operator, Edwin Lefèvre’s fictionalised biography of Jesse Livermore
- Common Stocks and Uncommon Profits, by Philip A. Fisher
- Security Analysis, by Benjamin Graham
Further down the list come up to 40 more recommendations, including titles such as The Millionaire Next Door, which won’t teach you anything about the stock market but will teach you about financial literacy, and The Richest Man in Babylon, another interesting book, though not one you can draw stock market concepts from.
You can also take a look at what we consider the best financial education books of all time.
See also: Books to make you smarter and help you make better decisions
Featured image: Richard D. Wyckoff, Public domain, via Wikimedia Commons.
