When people find out I work in the world of stocks, I often get asked 'what's a good book on stocks for my college age son?' or 'what book should I read if I want to learn about investing?'
Throughout the years, there have been thousands of books written on stock investing. Books on stocks became especially popular in the late 1990s with the dot-com boom as everyone raced to be 'in' the stock market.
Investing books are different from those on personal finance or trading. Personal finance books are like those by Suzy Orman which tell you how to get out of debt or best sellers like The Millionaire Next Door. The popular trading books cover more than just stocks and deal with the speculative side of the trade. Those are books like Market Wizards. Books on stock investing cover only the art of picking stocks.
I know what my own personal favorites are but I also took an informal poll in the office to find out what investment books influenced the great minds here at Zacks.
Some of my colleagues' answers surprised me.
The Top 5 Investment Books Of All Time
1. The Intelligent Investor, The Definitive Book On Value Investing, Revised Edition, by Benjamin Graham, Jason Zweig and Warren Buffett
This was the most read book in the office. It's considered a 'classic.'
Originally written by famed value investor Benjamin Graham in the 1930s, it was updated in 2003 and 2009 by Zweig and Buffett. The revised edition now includes more up to date examples on stock investing techniques.
While the book is jammed with practical information, many new investors might find it dry and intimidating. It's 640 pages long!
2. One Up On Wall Street: How to use what you already know to make money in the market by Peter Lynch
Does anyone remember Peter Lynch?
Peter Lynch is the former manager of Fidelity's Magellan mutual fund who rose to fame in the bull market rally of the 1980s. In the 1980s and 1990s he was one of the best known mutual fund managers in America but has since faded from view as hedge fund managers became the new golden boys.
One Up On Wall Street was his first book. The original edition came out in 1989 but the second edition was revised for the dot-com boom in 2000.
It incorporates his popular investment philosophy: 'buy what you know.'
3. The Essays of Warren Buffett: Lessons for Corporate America, Second Edition by Warren Buffett and Lawrence Cunningham
This book contains Buffett's letters to Berkshire Hathaway shareholders over the last several decades through 2008. The letters are filled with more than just updates about the company as Buffett also shares investing tidbits and insight into his investing philosophy.
This may sound like a snooze, but Buffett's folksy writing style makes it seem like he's talking directly to you.
4. The Future for Investors: Why the Tried and the True Triumph Over the Bold and the New by Jeremy Siegel
Published in 2005, the book shatters the myth that investors have to be in the latest 'in' growth stock or hot IPO to be successful investors.
For instance, he compares the historical returns of Exxon and IBM. IBM was the Microsoft or Apple of its time in the 1940s and 1950s. Exxon was the boring big oil company. Even though IBM was growing earnings at a faster pace, Exxon had a lower P/E and paid a larger dividend. Readers might be surprised at which company was the better long term investment.
Siegel explains why dividends matter for long term investors and how a company that makes candy triumphed over all of those with the latest hot product.
5. Rule #1: The Simple Strategy For Successful Investing in Only 15 Minutes a Week! by Phil Town
This book didn't gain much traction in the investing world because it was released in 2007 just before the financial crisis hit. But many here at Zacks found it especially helpful for novice investors because it lays out an investing plan.
Town's strategy is to find and invest in wonderful businesses, including those with moats and other margins of safety. It incorporates both value investing principals espoused by Graham and Buffett with some technical analysis.
These Books Are Just A Start
I know many of you will have different choices than these 5 books.
It's important to remember that there isn't just one book which will give you all the answers or a winning investment plan. The key is that they each offer basic information in which to learn how to invest in stocks.
The learning never ends. I've read some of the books listed above more than once and continue to reference back to them and to my favorite web sites like Zacks.com on a daily basis.
But if stock investing is your goal in 2013, these 5 books are a good place to start.
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