8 Investing Books That Helped Me Beat the Stock Market
"I have known no wise people who didn't read all the time." -Charlie Munger
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The Warren Buffett Portfolio by Robert Hagstrom
The unrealized capital gain in your portfolio is yours to keep as long as you own the stock. By holding on to the gain, assuming the investment tenets behind owning the company have not changed, you are able to compound your net worth more forcefully.
A Random Walk Down Wall Street by Burton G. Malkiel
The key to investing is not how much an industry will affect society or even how much it will grow, but rather its ability to make and sustain profits. And history tells us that eventually all excessively exuberant markets succumb to the laws of gravity. The consistent losers in the market, from my personal experience, are those who are unable to resist being swept up in some kind of tulip-bulb craze.
The Money Masters by John Train
The essence of Warren Buffett's thinking is that the business world is divided into a tiny number of wonderful businesses—well worth investing in at a price—and a huge number of bad or mediocre businesses that are not attractive as long-term investments. Most of the time most businesses are not worth what they're selling for, but on rare occasions the wonderful businesses are almost given away. When that happens, buy boldly, pay no attention to current gloomy economic in stock market forecasts.
The Most Important Thing by Howard Marks
Remember, your goal in investing isn’t to earn average returns; you want to do better than average. Thus, your thinking has to be better than that of others—both more powerful and at a higher level. Since other investors may be smart, well- informed and highly computerized, you must find an edge they don’t have. You must think of something they haven’t thought of, see things they miss or bring insight they don’t possess. You have to react differently and behave differently. In short, being right may be a necessary condition for investment success, but it won’t be sufficient. You must be more right than others…which by definition means your thinking has to be different.
Margin of Safety by Seth Klarman
Investments, even very long-term investments like newly planted timber properties, will eventually throw off cash flow. A machine makes widgets that are marketed, a building is occupied by tenants who pay rent, and trees on a timber property are eventually harvested and sold. By contrast, collectibles throw off no cash flow; the only cash they can generate is from their eventual sale. The future buyer is likewise dependent on his or her own prospects for resale.
Winning The Loser’s Game by Charles D. Ellis
All forms of active investing have one fundamental characteristic in common: they depend on the errors of others. Whether by omission or commission, the only way a profit opportunity can be available to an active investor is for the consensus of other professional investors to be wrong. Although this sort of collective error does occur, we must ask how many these errors are made and how often any particular manager will avoid making similar errors at the same time and instead have the wisdom, skill, courage to take action opposed to the consensus. One way to increase success in life long investing is to reduce mistakes.
The More You Know by Michael Mauboussin
In too many cases, investors dwell solely on outcomes without appropriate consideration of process. The focus on results is to some degree understandable. Results—the bottom line—are what ultimately matter. And results are typically easier to assess and more objective than evaluating processes. But investors often make the critical mistake of assuming a good outcomes are the result of a good process and that bad outcomes imply bad process. In contrast, the best long-term performers in any probabilistic field—such as investing, sports-team management, and pari-mutuel betting—all emphasize process of outcome.
The Great Crash 1929 by James K Galbraith
Early in 1928, the nature of the boom changed. The mass escape into make-believe, so much a part of the true speculative orgy, started in earnest. It was still necessary to reassure those who required some time, however tenuous, to reality. And, as will be seen presently, this process of reassurance—of inventing the industrial equivalents of the Florida climate—eventually achieved the status of a profession. However, the time had come, as an all periods of speculation, when men sought not to be persuaded of the reality of things but to find excuses for escaping into the new world of fantasy.
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This article is not investment advice and represents the opinions of its author, Chris Franco. You can reach the author on Twitter @ChrisFranco. This article is for paid subscribers of the CMQ Investing newsletter. If this article was forwarded to you please consider becoming a paid subscriber to receive weekly articles like this every for $20/month. Learn more here.
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