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The 5 Books You Must Read Before Choosing Your Own Stocks

Updated on November 14, 2010

Below is a summary of what I believe to be the 5 essential books someone must read before they begin the task of picking their own stocks. These books are meant for the serious investor that wants to learn the fundamental investing knowledge necessary to choose good companies to buy common stock in. No book will give you the ability to predict the future perfectly, and all investments have risk, but these will start you on the path to successful investing. If you are new to investing, I recommend reading the books in the order they are listed below.

One Up On Wall Street

One Up On Wall Street is written by Peter Lynch, the man many would consider the most successful mutual fund investor of all time. This book will do two things for you. First, it will introduce you to some of the fundamental concepts involved in common stock investing. Secondly, and most importantly, the book will help you start to enter an investing mindset. After reading this book you will think more like an investor and begin opening your eyes to the multitude of potential companies  to invest with.

The Intelligent Investor

Many consider this book written by Benjamin Graham to be the greatest investment book ever written for the do-it-yourself-investor. The book delineates between the "defensive investor" and the "enterprising investor." The defensive investor being the average investor that wants to safely grow their money at a decent return. The enterprising investor is the investor that wants to earn an above average return. The book will adequately prepare you for either path and give you a fundamental knowledge in how to accomplish the number one investing tenet: Buy low, sell high.  

The Interpretation of Financial Statements

Another classic book written by Benjamin Graham. This book is contains essential knowledge for anyone attempting to understand the financial strength of a company. If you truly want to learn to invest, then you need to be able to read and understand the annual reports and other accounting forms.  An investor lacking a basic understanding of how to read financial statements is more prone to being mislead by the very sneaky accountants at some companies.

Security Analysis

Yet another book written by Benjamin Graham, this one walks the investor through the process of choosing, analyzing and valuing stocks. This book is The Intelligent Investor, on steroids. Within these pages is everything you will ever need to know about investing in stocks. By the time you read all 700 pages, you will be able to analyze any investment.

Rule Number 1 Investing

A relatively new book on the scene in comparison to the previous four books. I chose this book as a must because in my opinion Phil Town does an excellent job of squeezing all of the fundamental knowledge from investors like Warren Buffet, Peter Lynch, and Benjamin Graham into one smooth investing system. The book will walk you through how to choose a great company, value their stock, understand technical charts, and how to begin if you are new to investing. I have  never read a book that makes investing so easy to understand and simple as this book. He uses everyday examples to help you understand how to analyze a business and it's management.

Disclaimer: This article is for entertainment purposes only and provides no promises of investment success. All investing has risks and you could lose some or all of your money by investing in any type of investment. Seek qualified professional help before investing.


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