Reading list for beginning investors (OCTOBER 2021) – that will be the title of this article.
Table of Contents
It seems that the easiest way to get confused in a bookstore is in the business literature department among biographies of entrepreneurs, cases of successful companies, and methods for optimizing work processes. Some of them, are a whole event, while others become like similar books.
The entire segment of business literature can be divided into two types. The first includes books that provide applied knowledge and recommendations, for example, in the field of negotiation practices, sales, time management. These life hacks, of course, can and even need to be applied in practice, integrated into your daily work.
The second type of business literature is the success stories of famous entrepreneurs. They can be interesting, but rarely literally applied. Rather, they provide an opportunity to look at the business world through the eyes of another entrepreneur. This allows you to more objectively evaluate your management decisions.
Business literature cannot be a guide to action, it should not be viewed directly in an applied sense – since there will never be a complete coincidence of the author’s methods, advice, experience, expertise (even if he is an absolute management guru and creator of a multinational company) with your business.
But, like a work of art, it makes you think. About yourself, about life, about others. About processes, technologies, motivation, and goals. This is an extra opportunity to look at your company from the outside, through the eyes of the author or methodology.
What could you have missed? What should you pay attention to? To make things easier for beginning investors and business people, I have selected some books to help you understand the world of economics, finance and investment. With their help, without having a special education, you can pump knowledge and learn how to invest money wisely
1. ”The intelligent investor” – by Benjamin Graham
The book was first published in 1949, but is still relevant today. This book can be easily called a guide for a beginning investor. There are no mathematical formulas, but there are many fundamental principles of investing.
Benjamin Graham founded the value investing strategy. It shows that some investors are looking for undervalued companies and purchase stocks of them with the expectation on a future growth. The book outlines the principles of how to do this.
Due to this book, you will learn to distinguish the price of a company from its real value, you will be able to understand the basics of the stock market and fundamental analysis. Moreover, the book will explain you why the stock you obtained is a very important part of the business.
2. “The Most Important Thing: Uncommon Sense for the Thoughtful Investor” – by Howard S. Marks
An investor with 20 years of experience in banks and investment companies publishes his notes, which he wrote over the time that he worked with clients. This book is about the philosophy of investing. You will not find any charts or calculations in the book, but you will find many advices to novice investors about the price and value of companies. Due to the book you will learn how to manage risks, control your emotions and manage the capital.
This book is a must read for anyone looking to make money in the stock market. This is not a How To Do book, but rather helps the reader understand the role of cycles in economics and markets. The greatest investor Warren Buffett also recommended this book, he really encouraged Howard to write something about markets and cyclicality.
3. “Economics: The User’s Guide” – by Ha-Joon Chang
A professor from Cambridge University of Korean origin in his book understands, together with the reader, how the world economy works. The examples are very simple. The book is about a boy who has only 2 pence and wanted to buy bird feed. He was persuaded by his father to put money in the bank, which the boy did. But then the boy gets scared for his money, shouts and demands to return it, seeing that all other customers of the bank began to demand their money back.
So the author begins to talk about the functions of investment banks and moves on to the causes of the 2008 global financial crisis. The topic of the book floating from simple to complex one. Starting with a short overview of capitalism history, the author speaks about the main functions of money, exchange rates, the basic laws of the economy, the structure of central banks and why they are needed, the work of supply and demand and why they are so important.
4. “How to Speak Money” – by John Lanchester
For those who do not speak it, the language of money may seem incomprehensible, and its ideas may be too difficult to understand. How to Talk About Money is a fascinating and informative attempt by renowned author John Lanchester to bridge the gap between the people who make money and the rest of us. With characteristic wit and outspokenness Lanchester shows how the world of finance and economics really works – from the terms of your personal checking account to bankers’ evasions before Congress.
“How to speak money” shows that the language of money is often a tool for concealment and deception; he explains hundreds of common economic terms, from GDP to the IMF, from depreciation to securitization and secured debt; and he argues that we all need to talk about money so that those who didn’t really write financial rules are for themselves.
5. “The Snowball: Warren Buffett and the Business of Life” – by Alice Schroeder
Here is a book about the life and times of one of the most respected people in the world, Warren Buffett. The legendary investor from Omaha never wrote a memoir, but now he has given one writer, Alice Schroeder, unprecedented access to direct exploration of his works, opinions, struggles, victories, follies and wisdom with him and those closest to him. The result was an open and complete biography of the man known throughout the world as the “Oracle of Omaha”.
Although the media is constantly following him, Buffett himself has never told the full story of his life. His reality is confidential, especially by celebrity standards. Indeed, although the homespun personality that the public sees is true insofar as it enters, it enters only to a certain extent. Warren Buffett is a person with a lot of paradoxes.
Over the years, he has treated his investors as partners, acted as their manager, and advocated integrity as an investor, CEO, board member, essayist, and speaker. At the same time, he became the richest man in the world from the humble headquarters of his company Berkshire Hathaway in Omaha. All this does not fit the term “simple”.
When Alice Schroeder met Warren Buffett, she was an insurance industry analyst, but she was also a good writer, who was known for her keen perception and business insight. Her work on finance impressed him, and when she got to know him, she realized that while much had been written about his investing style, no one went further than this to explore his broader philosophy, which involves a complex personality and the details of his life. Because of this, he decided to collaborate with her in writing a book about himself that he would never write.
After Buffett spent many hours answering Alice’s questions, giving a full access to his life – opening his files, remembering his childhood. As a human being, his own life, like most other lives, was a mixture of strengths and weaknesses. And yet, as significant as his wealth may be, Buffett’s legacy will not be his wealth rankings; it is his principles and ideas that will enrich people’s lives. This book will tell you why Warren Buffett is the most compelling American success story of our time.
To sum up
When we talk about books for investing, there are three other important books that should be mentioned. These are “Investments” by William Sharpe, or “Company Valuation Under IFRS” by Nick Antill. I have not included them in the main list because they are much more complex than the books above.
They have a lot of formulas, graphs and specific terms, but also a lot of use, don’t even be scared because without them, the literature on investment education would be not helpful. For example, in William Sharpe’s book, after every chapter there are assignments to test how you understood the presented material and answer questions for the CFA Professional Financial Analyst certification exam
We hope this book list will be a good guide for you to understand how the world of money is working, where you have to make your start and continue with confidence to reach your financial goals.
Reading articles will be not enough to be a successful in your openings, you should first discover the ups and downs, the stories of the most successful people and companies, have a clear vision of where you are going, and be ready for possible obstacles. These books can be a good start for your investing career and lead you to good results.
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