Thursday, June 21, 2007

Investing Book Recommendations

There are so many investing books out there, so how does someone new to the market start investing?

Books are a good way to learn. If you want a broad overview, you should start with the infamous Dummies series, and get Investing For Dummies, 4th Edition (Eric Tyson). Investors have to start somewhere, and the Investing For Dummies is a good start. (Alternatively, you can also buy and read "Personal Finance For Dummies" by Eric Tyson).

Okay, if you now know the basics, and know about 401ks/IRAs, stocks, ETFs, mutual funds, and have a general idea about the market, what should you read next?

Right now, there are many investing styles ranging from Growth to Value to everything in between. Some of these styles are very different from each other, and each philosophy may have very different rules. So where do we start?

I believe to get a good overview of the different styles, you should read these four books and decide for yourself what kind of investor you can become:

  1. GROWTH: How To Make Money In Stocks: A Winning System in Good Times or Bad, 3rd Edition (William O'Neil)
  2. ?: Jim Cramer's Real Money: Sane Investing in an Insane World (Jim Cramer)
  3. ?: One Up On Wall Street : How To Use What You Already Know To Make Money In The Market (Peter Lynch)
  4. VALUE: The Essays of Warren Buffett : Lessons for Corporate America (Warren Buffett)

To start out, I would recommend reading both Jim Cramer's "Real Money: Sane Investing in an Insane World" and Peter Lynch's "One Up On WallStreet", Millenium edition.

Jim Cramer's book is a more contemporary look at investing, and goes into detail about the basics of stock investing, rules, cycles, stock sectors, creating a discretionary portfolio, spotting bottoms, and spotting tops, just to give a small sample.

Peter Lynch is the Legendary investor who managed Fidelity's Magellan to outstanding performance. Invest in what you know. He groups stocks into six categories such as "Slow Growers", "Stalwarts", "The Fast Growers", "The Cyclicals", "Turnarounds", and "Asset Plays". He helps investors in the process of choosing great stocks, and even multibaggers (make many times your original investment). Even if the book was written in 1989, this book is still a timeless classic. The Millenium edition has an interesting introduction by Peter Lynch himself in 2000, during the height of the dot-com bubble.

To get two very different takes on investing, you should read both William O'Neil's book (founder of Investors Business Daily , and a die hard growth investor who likes strong earnings growth and great charts), and Warren Buffett's book (Value Investor extraordinaire who made people rich through Berkshire Hathaway (BRK.B)). You'll see how two legendary investors look at investing in two different ways. But both succeed!

There are other recommendations to the right as well, but you may want to first try the books above first.

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