Top 10 Books for Long-Term Investing
There are many other great books on trading, economics, the psychology of investing, the history of finance, etc. that I haven't included in this list, but that contain valuable insights for investors. This list strictly deals with how-to books for successful long-term investing. If you read these 10 books (one isn't even a book, it's an essay) and you follow the basic precepts (buy value, buy safety, buy businesses with a durable competitive advantage, allow your inves tments to compound over many years), I have no doubt you can easily earn 15% -30% per year, after tax. My only other assumptions are that you're capable of reading English on a 10th-grade level and that you can handle basic math with the help of a calculator. Your investing shouldn't require more than 10 hours per week. If you make more than two to three investments per year, you're working way too hard. You can buy all of the books on this list easily and cheaply (except for Seth Klarman's book, which is out of print). If you study them all carefully, it might take you six months. Your total tuition wouldn't equal $1,000 – and you'd know far more about how to be a successful investor than 99% of the world's top MBA graduates. Being a successful investor takes a little bit more than just knowledge. You've also got to master the traits listed in the very first "book" on my list. It's an essay written by Richard Russell. It contains the only real secret to becoming wealthy: the power of compound interest. It also demonstrates the key emotional distinction between wealthy people and everyone else: "...The wealthy investor tends to be an expert on values. And if no outstanding values are available, the wealthy investor waits... But what about the little guy? This fellow always feels pressured to 'make money.' And in return he's always pressuring the market to 'do something' for him. But sadly, the market isn't interested... And because the little guy is trying to force the market to do something for him, he's a guaranteed loser. The little guy doesn't understand values so he constantly overpays. He doesn't comprehend the power of compounding, and he doesn't understand money. He's never heard the adage, 'He who understands interest – earns it. He who doesn't understand interest – pays it.'" With this emphasis and my earlier caveats, here are my personal top 10 books on common stock investing. 1. 2. 3. 4. 5. 6. 7. 8. Richard Russell, "Rich Man, Poor Man" (available free at http://www.dowtheoryletters.com/DTLOL.nsf) Ben Graham, The Intelligent Investor (especially chapters 8 and 20) Warren Buffett, the letters of Warren Buffett (available free http://www.berkshirehathaway.com/) Mohnish Pabrai, The Dhandho Investor Tweedy, Browne, "What Has Worked in Investing" (available free at http://tweedy.com/content.asp?pageref=reports) David Dreman, Contrarian Investment Strategies Joel Greenblatt, You Can Be a Stock Market Genius Martin J. Whitman, the letters of Marty Whitman (available free at http://www.thirdavenuefunds.com/taf/aboutus-shareholder-letters.html)
9. Martin J. Whitman, Value Investing 10. Seth Klarman, Margin of Safety