Suggested Reading

Here is my suggested reading list which consists of books, sites, blogs, and poems that have been recommended to me by people that I consider my mentors. 

 

Books:

The Intelligent Investor – By Benjamin Graham

Graham is considered the father of value investing and has been an inspiration for many of today’s most successful business people including Warren Buffett. In the Preface, Warren Buffet states, “To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework.”

Here is an excerpt from the book:

But note this important fact: The true investor scarcely ever is forced to sell his shares, and at all other times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be  better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons’ mistakes of judgment.

Thinking Fast and Slow –by Daniel Kahneman

This book was an international bestseller written by Daniel Kahneman, who focuses on the behavioral psychology involved investing, which maybe the most important part.

Here is an excerpt from the book:

A story in Nassim Taleb’s The Black Swan illustrates this automatic search for causality. He reports that bond prices initially rose on the day of Saddam Hussein’s capture in his hiding place in Iraq. Investors were apparently seeking safer assets that morning, and the Bloomberg News service flashed this headline: U.S. TREASURIES RISE, HUSSEIN CAPTURE MAY NOT CURB TERRORISM. Half an hour later, bond prices fell back and the revised headline read: U.S. TREASURIES FALL; HUSSEIN CAPTURES BOOSTS ALLURE OF RISKY ASSETS. Obviously Hussein’s capture was the major event of the day, and because of the way the automatic search for causes shape our thinking, that event was destined to be the explanation of whatever happened in the market on that day. The two headlines look superficially like explanations of what happened in the market, but a statement that can explain two contradictory outcomes explains nothing at all. 

A Random Walk Down Wall Street –by Burton G. Malkiel

This is one of my favorite Investment books. Malkiel teaches the basic terminology of Wall Street along with a gimmick-free, time-tested, long-range investment strategy. He draws on his experience as an economist, financial advisor, and investor. He even throws in some comedy such as the following quote:

Tip of the Week: If you bought $1,000 worth of Nortel stock one year ago, it would now be worth $49. If you bought $1,000 worth of Budweiser (the beer, not the stock) one year ago, drank all the beer, and traded in the cans for the nickel deposit, you would have $79. My advice to you…start drinking heavily.

On a more serious note, Malkiel says this about speculating:

It is the definition of the time period for the investment return and the predictability of the returns that often distinguish an investment from a speculation. A speculator buys stocks hoping for a short-term gain over the next days or weeks. An investor buys stocks likely to produce a dependable future stream of cash returns and capital gains when measured over years or decades.

 

Blogs:

The Irrelevant Investor –by Michael Batnick

Here is an excerpt from one of his recent posts:

Nick Murray once said, “if you want to suppress volatility, you will suppress returns.” This definitely applies to many investors who either try to time the market on their own, or turn to complex and often times dangerous strategies designed to deliver stock like returns with bond like risk. Such a strategy by definition, cannot deliver on its promise. Look no further than the Merrill Lynch structured notes that lost 95% of its value. And although complex products almost never live up to their promise, there are simple ways to lower volatility without losing your shirt.

A Wealth of Common Sense—Ben Carlson

  

Here is an excerpt from the blog:

Albert Einstein once said, “If you can’t explain it to a six-year old, you don’t understand it yourself.” The main reason I started this website is to try to explain the complexities of the various aspects of finance in a way that everyone could understand them. Both the economy and the financial markets are complex adaptive systems, but I’ve never found complex problems require complex solutions. Common sense and self-awareness are extremely underrated attributes in the world of finance.

Suggested Sites:

Market Watch

MarketWatch provides the latest stock market, financial and business news. Get stock market quotes, personal finance advice, company news and more.

Wall Street Journal

The Wall Street Journal 

The WSJ is one of my favorite newspapers to read when I have the time. However, the subscription is expensive. The easiest way to get around this is to simply google the title of any article of interest to you. Just add WSJ to the end of the article when you type it into the google search bar. 

Additional Information:

This quote and poem were passed on to me and are worth pondering. They contain timeless truths to remember no matter our current circumstances and pursuits.

The Man In the Arena – by Theodore Roosevelt 

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

IF –Rudyard Kipling

If you can keep your head when all about you

Are losing theirs and blaming it on you,

If you can trust yourself when all men doubt you,

But make allowance for their doubting too;

If you can wait and not be tired by waiting,

Or being lied about, don’t deal in lies,

Or being hated, don’t give way to hating,

And yet don’t look too good, nor talk too wise:

If you can dream—and not make dreams your master;

If you can think—and not make thoughts your aim;

If you can meet with Triumph and Disaster

And treat those two impostors just the same;

If you can bear to hear the truth you’ve spoken

Twisted by knaves to make a trap for fools,

Or watch the things you gave your life to, broken,

And stoop and build ’em up with worn-out tools:

If you can make one heap of all your winnings

And risk it on one turn of pitch-and-toss,

And lose, and start again at your beginnings

And never breathe a word about your loss;

If you can force your heart and nerve and sinew

To serve your turn long after they are gone,

And so hold on when there is nothing in you

Except the Will which says to them: ‘Hold on!’

If you can talk with crowds and keep your virtue,

Or walk with Kings—nor lose the common touch,

If neither foes nor loving friends can hurt you,

If all men count with you, but none too much;

If you can fill the unforgiving minute

With sixty seconds’ worth of distance run,

Yours is the Earth and everything that’s in it,

And—which is more—you’ll be a Man, my son!