The Motley Fool

5 Books Every New Investor Should Read

“Read 500 pages every day. That’s how knowledge works. It builds up like compound interest.”

— Warren Buffett

On top of learning from investment websites, reading a wide range of investing books can help investors get better at the craft.

As such, here’s a reading list that new investors can use to gain more knowledge on the stock market and investing in general (note: my list is by no means exhaustive).

The Neatest Little Guide to Stock Market Investing by Jason Kelly

This book covers the basics. From why a company lists on a stock market and why stocks make good investments, to evaluating a share and selling your shares. It also has a section on lessons to learn from investing masters.

The Warren Buffett Way: Investment Strategies of the World’s Greatest Investor by Robert G. Hagstrom

As the title might suggest, The Warren Buffett Way is a book based on Warren Buffett’s way of investing. The book shows how Buffett looks at businesses and evaluates them.

The book also contains nine case studies on Buffett’s stock purchases, including investments in companies such as The Coca-Cola Company, American Express Company, IBM and H.J. Heinz Company (now merged with Kraft Foods to form Kraft Heinz Company).

For a book review of The Warren Buffett Way, you can head here.

One Up On Wall Street: How To Use What You Already Know To Make Money In The Market by Peter Lynch

The book’s author, Peter Lynch, ran the Fidelity Magellan Fund between 1977 and 1990. During those 13 years, the fund posted an annual average return of 29% and beat the S&P 500 in 11 out of the 13 years.

One Up On Wall Street was one of the very first books I read on investing. It helped craft my investment approach of picking simple and great businesses.

Lynch famously categorised stocks into six buckets: slow growers, stalwarts, fast growers, cyclicals, turnarounds and asset plays. Each category has its own distinct set of characteristics. The book also provides an investing checklist that investors can use. For an example of how the checklist can be implemented, you can check out Chong Ser Jing’s article here.

Common Stocks and Uncommon Profits and Other Writings and Other Writings by Philip A. Fisher

Warren Buffett considers Philip Fisher as one of his mentors. Buffett even once said that his investing style was 85% influenced by Benjamin Graham (more on him later) and 15% influenced by Fisher.

The “scuttlebutt” investment technique was made famous by Fisher through this book. The technique involves gathering information from our day-to-day experiences. An example of scuttlebutt is visiting a shopping mall owned by a retail real estate investment trust (REIT) to observe its traffic flow and vibrancy. For my own scuttlebutt on three Singapore-listed companies, you can head here, here and here.

Fisher’s book also has a 15-point checklist that investors can use. For an in-depth explanation of each of the points, you can check out the article here.

The Intelligent Investor: The Definitive Book on Value Investing by Benjamin Graham

This book was written by another of Warren Buffett’s mentors, Benjamin Graham, who is often touted to be the father of value investing. The Intelligent Investor espouses many important investing concepts. Two such concepts are Mr Market and the margin of safety. For a review of the book, you can go here.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.