Best Stock Market Books
Learn the Stock Market with These Timeless Investing Books
I have compiled this list primarily for the person who knows little to nothing about the stock market. I was in your position not long ago and these are the books that I read.
Stocks for the Long Run - Jeremy Siegel
This book is the best way to go from 0 to 55 mph in your stock market knowledge quickly. Jeremy Siegel is a professor, and this shows through in Stocks for the Long Run: it starts at the beginning of the US stock exchange, in the late 1800's, and comes all the way up to the present.
Siegel educates the layman on all the basics of investing. He takes us through the history, how markets work, what happened when the Great Depression hit, how price-earnings ratios have changed throughout time, and how they might change in the future due to globalization. He even takes us into the modern world of foreign investment, US trade deficits, and the new ETF's (exchange traded funds). Oh yeah, he educates us all about mutual funds, too.
While this book may seem long to the person who is not entirely passionate about learning the stock market, I can personally vouch for the value of each and every tidbit.
If you read this book, you will have a broadbased knowledge of the basics in every area of investment. After that, you will be much better equipped to move more into the implementation of various stock market strategies. But I would not recommend skipping this book unless you already have a pretty good (and broad) understanding of both stocks and bonds.
You Can Be a Stock Market Genius - Joel Greenblatt
This is the favorite book of at least a couple billionaires. Greenblatt himself has earned almost unbelievable returns: 40% a year with his Gotham Capital fund. (At least that's what he was making before the market crashed in 2008.)
The title seems so corny, and this is why I stayed away from this book for a while. "You can be a stock market genius"... Oh, really? I'm sure it's just oh so simple, too. Right?
Well Greenblatt doesn't quite say it's easy, but he makes the point (which many of the most seuccessful investors make) that if you can think for yourself and learn to read financial statements, then you are going to be able, in time, to see opportunities that everyone else is missing.
But this guy is not just preaching: he gives many examples of opportunities that he spotted and profited on in the past. And he goes into lots of detail about his thought processes that he went through at each of these times. This may really be the real gift of the book: that he really does open up his own mind and let us in. And funnily enough, it's not super complex in there. He basically just uses simple math to figure things out. Maybe it's too simple?
Common Stocks and Uncommon Profits - Philip Fisher
This book came to my attention through Warren Buffett. He credits it with shaping his investment philosophy to a large degree. In fact, he says that about 20% of his entire philosophy is based on Common Stocks and Uncommon Profits.
This Philip Fisher book is really great. And it's really different, like the man himself. (He was a loner.) He does a great job of carving away at what makes a great long-term business. That was his thing, like it is Buffett's: to find those "wonderful" stocks that you can buy and hold for your whole lifetime if you want. But unlike Buffett, Fisher was always very eager to buy stock in technology companies. So he takes us through his valuation process, and the different factors that he looks at in a company before buying it.
Market Wizards - Jack Schwager
Market Wizards is simply awesome. I would definitely say it is the most advanced of all the books I've listed here. Now I can definitely guarantee you that the interviews in this book are super fascinating. Can you make money this way? Ehh... These methods are for hyper-geniuses who are mad for money. Most of the traders interviewed in Jack Schwager's book made their money outside of the stock market: commodities, forex, even trading bonds. Some of them played in stocks.
What is fascinating about this book is that it lets you into the heads of a bunch of guys who embody the more typical notion of a Wall Street trader, but a genius one. They have made and lost simply immense sums of money (in time spans measured in days, not years). And they all have a different angle on what principles work in order to beat the market. (Often their ideas about the "truth" are completely contrary...)
Still, I recommend this book for its entertainment value if not its emulation value. Maybe I am biased, but I prefer to buy into stocks "for the long run".