This question often pops up more often than any other question I am asked. I’ve been blogging about investing in the stock market more specifically being a value investor for almost 2 years now and I’ve frequently been asked on what are books and reading materials that are recommended for the value investor.
Before you read any further take note that this recommendation is most especially useful for those who are interested in investing in the stock market (most especially the Philippine stock market) and those who are interested on being a value investor.
It’s a good thing that readers of this blog are asking what they should read. It shows that they are interested in becoming a value investor. When asked how he became so successful in investing, Buffett answered: “We read hundreds and hundreds of annual reports every year.” If Buffett who is already a genius in investing reads hundreds and hundreds of annual reports every year, we mere mortals should reads thousands if not hundreds more pages than what Buffett reads. But the question is what specifically as a value investor should you read?
I read a lot of books and materials on business, finance and books for the value investor but what I’ve read is only the tip of the iceberg. I’m sure there are more good books and materials out there for those who want to become a better value investor. My recommendation is based on what I have found useful on what I have read so far.
1.) Current events research – To be updated in the world of personal finance and the latest news on business, I read the following materials:
a.) Money Sense – Money sense is the Philippines only magazine on personal finance. It is published once every two months. It sells for only P 120.00. It is available via subscription or over the counter purchase through a news stand. With a tagline of “Save, spend and invest wisely,” Money sense helps you achieve just that through its useful articles, tips and information on personal finance. Although you can’t find anything specific here that is helpful for the value investor, you can uncover a lot of gems here on personal finance. What I like best about this magazine is the book reviews. It is here where I learned first about the book Rule #1 which gave me an introduction to the world of being a value investor. Other helpful features are announcements on seminars regarding personal finance.
b.) Business World – This is perhaps the Philippine equivalent of the Wall Street journal. Business World helps me be updated on the latest news on the company whose stock I consider as good value investment deals. Informative articles on the world of business helps you become a more informed value investor and business person.
c.) Business section of other news papers – For other regional business news, I try to read the business section of the all other news papers online such as Inquirer, Sun-Star and the Philippine Star.
2.) Books – There are hundreds if not thousands of good books for the value investor. So far these are the best ones I have read.
a.) Complete Idiot’s guide to Value investing – So simply written that indeed even an idiot can understand it! I am trying to find the “For dummies” equivalent of this book but until now there are no copies available yet. Don’t let its simplicity deceive you. There are powerful lessons that you could learn here as a value investor. In fact I highly recommend this as an introductory book to value investing.
b.) Books written by Mary Buffett and David Clark – So far this dynamic duo has written five books and I have read four of them. Their books are the most detailed in revealing the methods and techniques of the world’s greatest investor, Warren Buffett. You can start off by reading, “The Tao of Warren Buffett” which will give you an “intellectual” framework on how Warren Buffett thinks. Afterwards you can then read “Buffetology” and then follow it up with “The new Buffetology.” Next in line would have to be “Warren Buffett and the interpretation of financial statements” which is not doubt and attempted remake of the “The interpretation of financial statements” by Benjamin Graham. Last but not the least you can get hold of “The Buffetology workbook.”
c.) Rule #1 by Phil Town – My very first book as a value investor. Rule #1 opened my door to value investing and Warren Buffett. After I finished reading the book, I got hooked on becoming a value investor.
d.) How Buffett does it by James Pardoe – This 100+ page book is such an easy read and is highly recommended as an introductory book on being a value investor more specifically on Warren Buffett.
e.) Reading from Warren Buffett himself – Warren Buffett may not have written a book but he is a very prolific writer. He writes a lot to his shareholders through his annual reports. Most books on Warren Buffett quote from his reports. Lawrence Cunnigham has done a magnificent job of compiling the Berkshire Hatheway annual reports into a book entitled “The essays of Warren Buffett – Lessons for Investors and Managers.”
f.) Other Warren Buffett books – Hundreds of books are written about Warren Buffett and his investment techniques. Some of the best I’ve read are those by Robert Hagstorm.
g.) Naked Finance – Strips down the nuances of finance into it’s bare naked form. Kind of like a finance for dummies book.
Whew ! I’m sure that looking at those list of reading materials makes you feel dizzy already ! Well that’s really the way it is. Nothing in this life comes easy. If you want to be a good value investor, you’ve got to work hard to hone your skills and you can do this by reading. I’ve not even started recommending reading from Warren Buffett’s mentors like “The Intelligent Investor” from Benjamin Graham. This book is considered as a classic and the “Bible” of value investing. Anyway you don’t need to read all of these materials. Books are like food. Some may taste better to me while others might taste like eating sand to you Just try to read the book reviews on the books I am recommending and have your pick.
Also take note that to be a good value investor you must have think like a good businessman. Always remember that when you are buying a stock you are buying a piece of a business before you buy a stock you have to think from a business perspective. Warren Buffett once said that “I am a better investor because I’m a businessman, a better businessman because I’m an investor.” Buffett’s mentor Benjamin Graham also said “Investing is most intelligent when it is most business like.” So do not be surprised when some of the reading materials I recommend on becoming a value investor in the stock market relates to business.
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Online there are hundreds of websites that provide helpful information for the value investor. Above all a value investor never fails to read zdiaz.com. You can click here to read my other articles on Financial management and investments.
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