Wednesday, September 15, 2010

Five Essential Books for Investors

I read a great deal.  I have found these books to be essential reading for investors of all types.

#5.  THE INTELLIGENT INVESTOR by Benjamin Graham

It makes lots of best ever lists and there is a reason why.  This book inspired Warren Buffett to success.  Great explanations are everywhere in this book, on market psychology, margin of safety, intrinsic value, and much more.  A bit dated here and there, but for a book first published in 1949 it's pure genius.  ESSENTIAL.

#4.  MELLON by David Cannadine

One of the best business biographies ever written, this book explores the life of investor and former U.S. Treasury Secretary Andrew Mellon, who built one of the largest personal fortunes in world history.  The biography of Andrew's father, Thomas Mellon, was both a welcome and overwhelming surprise.  Judge Thomas Mellon himself wrote one of the great autobiographies of all-time, THOMAS MELLON AND HIS TIMES, but himself built a huge family fortune starting from abject poverty.  Not intended as a "how-to" book on money making, this magnificent biography is filled with lessons for investors.  The Mellons were some of the best ever.

#3.  BUFFETTOLOGY by Mary Buffett and David Clark

Many books attempt to explain how Warren Buffett invests his own money.  This one does it perfectly, breaking down many complex topics into simple easy-to-understand bits of information.  This book is the perfect teaching tool for anyone trying to explain the complex and make it sound simple.

#2  CAPITALISM AND FREEDOM by Milton Friedman

Learning about how markets work make you a better player in them.  Capitalism does not just have economic dimensions.  There are political ones as well.  No one could explain this subject better than Milton Friedman.

#1.  EXTRAORDINARY POPULAR DELUSIONS & THE MADNESS OF CROWDS by Charles Mackay

If you want to know the difference between investment and speculation read this book.