Reading list: Best books for beginning investors – December 2021 – that will be the title of this article.
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If you are just starting your acquaintance with the stock market and feel a strong need for literature that will help you take your first steps, you are in the right place. Here I’ve compiled the very best investing beginner books that everyone should read.
You may be wondering why you need the next top books about investments, because there are quite a few such collections on the Internet? The fact is that in such lists of books about investing, they often popularize literature that has an extremely indirect relationship to finance, the stock market, economics and is completely unsuitable for learning anything.
Instead of conveying the necessary knowledge, the authors of these books convince readers of the need for investment, charge them with false optimism and do not say anything about the risks that need to be realized before you open a brokerage account.
The popularization of these books leads to the fact that crowds of people enter the market without thinking about what they are doing, why they are doing it, and whether the moment is right for this. People think that the stock market is a friendly place where everyone can get rich, they buy tons of popular stocks in the hope of capital gains and are not very careful.
But the stock market is a dark jungle, where someone’s blood is constantly spilled, wild animals live and full of robbers who will certainly want to take all your money from you.
Below you will find a list of the best investment books for beginners. Thanks to these books, you will learn how to make informed and informed decisions regarding the purchase of securities of a particular company, without regard to the opinions of analysts or the investment ideas of your broker.
You will have to spend a lot of time to properly understand the investment tricks, market realities and the business world. Of course, you can’t do without books. But what to read and where to start?
1. “Security Analysis” by Benjamin Graham and David Dodd
The book by Benjamin Graham that cannot be ignored is “Security Analysis”. It was co-written with David Dodd even before Graham’s most popular book, The Intelligent Investor, was published, but it will be better to read these books in the order in which they are presented in this collection.
In case other books tells you about investments in general, how to stay calm regardless of the market situation, how to quickly select stocks in a portfolio, then “Security Analysis” will open before you doors to the world of corporate finance.
It was this book that at one time gave the first impetus to the emergence of the profession of an exchange analyst in the world. When you first come across the task of evaluating the activities of a particular company, you will surely come across recommendations on the need to study the financial statements of this company.
This is great advice, but for a novice investor it is not entirely obvious which side to approach these reports. Here the book “Security Analysis” will come to your aid. Read it and immediately put into practice what you just learned.
It is guaranteed that after reading only the first and second parts of the book “Security Analysis” while studying the financial statements, you will already know more about the company than 99% of those who are currently its shareholders.
Benjamin Graham and David Dodd take financial statements under the microscope, focusing on things that you would never look at in your life. They teach you how to evaluate companies individually and compare them with each other using a set of financial ratios, and then draw the right conclusions based on the information learned, backing up all this with a lot of examples from the past.
This book can hardly be called a guide for novice investors. Nevertheless, if you want to delve into fundamental analysis of stocks, learn how to read and understand the financial statements of companies and stop flinching every time the stocks in your portfolio suddenly sink for unknown reasons, this book should become your desktop.
2. “Company valuation under IFRS: Interpreting and forecasting accounts using International Financial Reporting Standards” by Kenneth Lee
If, for some reason, the above book was not enough for you to evaluate the company’s performance and make an investment decision, this book will definitely put everything in its place.
Here it will be appropriate to recall the rule formulated by Vilfredo Pareto: 80% of the result will give you 20% of the effort (reading the books that we reviewed earlier), and only 20% of the result will be given to you by the book “Company Valuation”, but you will spend a lot of effort to master it.
The most basic difference of this book is that it is about International Financial Reporting Standards (IFRS). These are the standards that public Russian companies report on. Another undoubted advantage is that in some aspects differences are indicated between IFRS and US GAAP, which will undoubtedly be useful if you want to compare, for example, Russian and American companies from the same industry.
The main purpose of the book is to tell the reader about what data he needs for a correct assessment of a particular company and how the currently existing financial reporting standards can help him in this matter. In addition, it examines the differences and characteristics of the assessment of stable, cyclical and growing companies from different industries.
Despite the importance and complexity of the issues raised in the book, it is written in a fairly understandable language, which makes it quite accessible to those who have the desire and need to understand these issues.
If the other books in this collection are the ocean, then the book Valuation of Companies by Nick Antilla and Kenneth Lee is the Mariana Trench. If you fully assimilate the material outlined in it, you will always be one step ahead of any ordinary investor in the analysis and valuation of companies.
3. “Investment Valuation” by Aswath Damodaran
In the book “Investment Appraisal, tools and methods for appraising any asset ”is a kind of reference, structured so that the chapters are not linked. You open any chapter of this book and get a comprehensive answer to your question. A minimum of water is a maximum of practical benefits.
Reading this book from cover to cover is completely redundant, but it should certainly be somewhere alongside the other investment books in this collection on your desktop. You will learn from Benjamin Graham’s books that it is important to select into your portfolio stocks of outstanding companies that have proven their stable position in the market year after year, are managed by talented managers and are quite stress-resistant.
One of the most important aspects of wise investment Graham considered determining the fair value of securities. is covered in the books of Benjamin Graham, but Aswath Damodaran went much further in matters of asset valuation.
With the inhuman meticulousness of a finance professor, Aswath Damodaran will fill you up with a bunch of formulas, teach you to evaluate literally every aspect of a company’s business, and show you how to calculate the fair value of its shares.
Many people consider that Aswath Damodaran is Benjamin Graham of the 21st century. In one of his interviews, you can see him talking about the asset valuation. He is not just a professor of finance – this man is really passionate about his work and enjoys it. But this is not enough for him. He wants everyone to share his love for asset valuation, is this not a good reason to get one of the copies of his book?
To sum all this up
There are many different sources of information that can help you understand the principles of the investment process, but the best of them is the literature for investors. What books should you read to learn how to properly and profitably invest your money? To start investing, you need not only to choose the right instruments but also to learn how to calculate risks. First of all, you need to change your attitude to money, learn the basics of financial literacy and do psychology.
The aforementioned list nesting literature is the first sure step in creating a new tricky sphere big enough to cover, written by practitioners, which means it can be trusted. Thus, these books will help you lay a solid foundation on which you will build your financial independence over time. Download your knowledge and invest wisely! If you are already an experienced fighter, advise in the comments the books that helped you.
I hope these books will be a helpful guide for you and will assist you to gain new skills and knowledge about investing industry. Usually, the literature will give you more information than any articles or online courses.
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