What do all the great investors have in common?

They read. A lot! And while most of us will never manage the 300 to 500 pages that Warren Buffett does daily(!), we will do well if we at least increase our information intake by a book or ten a year.

For that reason, and because I often get asked by friends and family, I will list some of the best books I have read on investing et al for those that are interested. If any of you require a more comprehensive list, or more detailed thoughts on any of the books listed, kindly contact me at (futurewealth@mercato.co.za).

Happy Reading

Investment books

1. The Warren Buffett Way (Hagstrom) 

This book is fantastic and explains the essential concepts Buffett uses to identify and value investment opportunities. Hagstrom deftly does the explaining at the hand of actual investments Buffett made throughout the 70’s, 80’s , and 90’s. You do not need a degree in rocket science to understand this book, but a modicum of accounting knowledge, such as knowing what depreciation, EBIT, operating margin, discount rate, and the like are, will help you get the most from one of the best basic to intermediate investment books that I’ve read thus far.

2. One up on Wall Street (Peter Lynch)

Great read. If you buy no other investments books except by this author, you would still be doing your investing self a very meaningful service. Peter Lynch was one of the greatest portfolio managers (of a unit trust or mutual fund) of all time, and in One up on Wall Street and Beating the Street he takes the reader on a very insightful and easy to understand journey of how how he invested and you can too. 

3. Beating the Street (Peter Lynch)

In the same mold as One up on Wall Street. Buy both books and have TWO pens handy for all the valuable notes to be taken from these two investment classics. 

4. Against the Gods (Bernstein)

Peter L. Bernstein was an economist and a Wall Street legend. In what I consider one of his best books, Bernstein eloquently explains the origin, development, and implications of probability theory to making informed investment decisions. Investing is about return AND risk. This is one of the best books on the risk part of the investing equation.

5. Common Stocks and Uncommon Profits (Fisher) 

Philip Fisher was probably one of the three greatest influences in the making of Warren Buffett as an investor (Graham and Munger been the others). Need I say more?

6. The Intelligent Investor (Benjamin Graham)

In this book by Warren Buffett’s great mentor, two of the most basic concepts in ALL of investment management is stated and explained. In this book, you only need to read chapters 8 and 20 if I remember correctly. These chapters’ deal with the mr market metaphor and the margin of safety concept. The rest of the book I found a bit boring, but understanding and implementing the lessons learnt from the mr market and margin of safety concepts is worth more than your house. I’m serious!

The article is going to get VERY long if I list AND give a comment on each. What follows is a list and an invitation to ask me if you want to know more about any of the books mentioned. 

7. Competition Demystified (Greenwald) 

I can’t resist sharing a short comment on this book. One of the best books on strategy I have ever read, it tells the story of how a company called Walmart started in one of the poorest states in America (Arkansas) to conquer the retail world. You will learn that regional monopolies of scale are one of the most effective competitive advantages a business can have. Walmart did it in the USA and this book helped me to see that Afrimat (AFT) was implementing a similar strategy before the market became aware of it (when the share was at R3.30 – now +- R25).

8. Value Investing (Greenwald – advanced)
9. The Effective Investor (Busetti – advanced)
10. The Greatest Trade Ever (Zuckerman)

Better than the “Big Short” by Lewis

11. Strategic Intuition (Duggan – Columbia Business School) 
12. The Only Three Questions That Count (Ken Fisher – son of Philip Fisher)
13. The Warren Buffett CEO (Miles)
14. Buffet (Roger Lowenstein)
15. When Genius Failed (Lowenstein)
16. More Than You Know (Mauboussin)

Get all the books you can by this author. He is brilliant.

17. Market Wizards (Schwager – great books for traders) 
18. The Little Book that beats the Market (Greenblatt)
19. Fooled by Randomness (Taleb)
20. Black Swan (Taleb)

There are many more books like the ones listed, and in forthcoming articles I will mention some of them and share some of the insights that I have learnt along the way.

To be a great investor:

Rule number 1: Read

Rule number 2: Read

Rule number 3: Think hard about what you have read

Rule number 4: Repeat Rule 1 to 3