It Does Pay To Expand Your Knowledge
“Walk into a wealthy person's home and one of the first things you'll see is an extensive library of books they've used to educate themselves on how to become more successful.”
Please note that this website was created with quotes from many different books and sites listed below. Their content gave Prosperity Management Corp. the guidelines to our investment policies. We tried to compile the basics of all of this knowledge into this website, but if you're looking for a historical perspective on investing or a more detailed analysis of a certain topic, the books and sites listed below make for a great reading.
These well-written books and articles provide a thoughtful analysis of the past as well as valuable insights about the future, providing an outline for what works and what doesn't on Wall Street and in the business world. In other words, reading the right books will pay you by giving you a road map to financial freedom and success.
Here we give you a brief overview of our favorite investing books of all time and set you on the path to investing enlightenment.
Remember: Learning 10% about any given subject will save you 90% of mistakes and frustrations.
“The three most important books in life are: school book, cookbook and check book.”- Joyce Mattingly
"The Intelligent Investor" (1949) by Benjamin Graham Benjamin Graham is undisputedly the father of value investing. His ideas about security analysis laid the foundation for a generation of investors, including his most famous student, Warren Buffett. Published in 1949, "The Intelligent Investor" is much more readable than Graham's 1934 work entitled "Security Analysis", which is probably the most quoted, but least read, investing book. "The Intelligent Investor" won't tell you how to pick stocks, but it does teach sound, time-tested principles that every investor can use. Plus, it's worth a read based solely on Warren Buffett's testimonial: "By far the best book on investing ever written."
"Common Stocks And Uncommon Profits" (1958) by Philip Fisher Another pioneer in the world of financial analysis, Philip Fisher has had a major influence on modern investment theory. The basic idea of analyzing a stock based on growth potential is largely attributed to Fisher. "Common Stocks And Uncommon Profits" teaches investors to analyze the quality of a business and its ability to produce profits. First published in the 1950s, Fisher's lessons are just as applicable half a century later.
"A Random Walk Down Wall Street" (1973) by Burton G. Malkiel This book popularized the ideas that the stock market is efficient and that its prices follow a random walk. Essentially, this means that you can't beat the market. That's right - according to Malkiel, no amount of research, whether fundamental or technical, will help you in the least. Like any good academic, Malkiel backs up his argument with piles of research and statistics. It would be an understatement to say that these ideas are controversial, and many consider them just short of blasphemy. But whether you agree with Malkiel's ideas or not, it is not a bad idea to take a look at how he arrives at his theories.
"Learn To Earn" (1995), "One Up On Wall Street" (1989) or "Beating The Street" (1994) by Peter Lynch Peter Lynch came into prominence in the 1980s as the manager of the spectacularly performing Fidelity Magellan Fund. "Learn To Earn" is aimed at a younger audience and explains many business basics, "One Up On Wall Street" makes the case for the benefits of self-directed investing, and "Beating The Street" focuses on how Peter Lynch went about choosing winning stocks (or how he missed them) while running the famed Magellan Fund. All three of Lynch's books follow his common sense approach, which insists that individual investors, if they take the time to do their homework, can perform just as well or even better than the experts.
"Stocks For The Long Run" (1994) by Jeremy Siegel A professor at the Wharton School of Business, Jeremy Siegel makes the case for - you guessed it - investing in stocks over the long run. He draws on extensive research over the past two centuries to argue not only that equities surpass all other financial assets when it comes to returns, but also that stock returns are safer and more predictable in the face of the effects of inflation.
“The Wealthy Barber” (1997) by David Chilton David Chilton simplifies the complex puzzles of personal finance and helps you achieve financial independence. With the help of his fictional barber, Roy, and a large dose of humor, Chilton shows you how to take control of your financial future--slowly, steadily, and with sure success. Chilton's plan (detailed in an entertaining story) is no get-rich-quick scheme, but it does make financial independence possible on nothing more than an average salary. Even if you consider yourself a financial "basket case," Chilton explains how you can easily put an effective financial plan into action.
"Rich Dad Poor Dad" (1997) by Robert T. Kiyosaki This book is all about the lessons the rich teach their kids about money, which, according to the author, poor and middle-class parents neglect. Robert Kiyosaki's message is simple, but it holds an important financial lesson that may motivate you to start investing: the poor make money by working for it, while the rich make money by having their assets work for them. We can't think of a better financial book to buy for your kids.
"Common Sense On Mutual Funds" (1999) by John Bogle John Bogle, founder of the Vanguard Group, is a driving force behind the case for index funds and against actively-managed mutual funds. In this book, he begins with a primer on investment strategy before blasting the mutual fund industry for the exorbitant fees it charges investors. If you own mutual funds, you should read this book.
"Irrational Exuberance" (2000) by Robert J. Shiller Named after Alan Greenspan's infamous 1996 comment on the absurdity of stock market valuations, Shiller's book, released in Mar 2000, gives a chilling warning of the dotcom bubble's impending burst. The Yale economist dispels the myth that the market is rational and instead explains it in terms of emotion, herd behavior and speculation. In an ironic twist, "Irrational Exuberance" was released almost exactly at the peak of the market.
"The Essays Of Warren Buffett: Lessons For Corporate America" (2001) by Warren Buffett and Lawrence Cunningham Although Buffett seldom comments on his current holdings, he loves to discuss the principles behind his investments. This book is actually a collection of letters that Buffett wrote to shareholders over the past few decades. It's the definitive work summarizing the techniques of the world's greatest investor. Another great Buffett book is "The Warren Buffett Way" by Robert Hagstrom.
“Your Money And Your Brain” (2002) by Jason Zweig Why do smart people do dumb things? Jason Zweig, who writes for The Wall Street Journal, tries to answer that question, particularly in regard to investing. Your Money And Your Brain is an excellent introduction to the emerging field of neuro-economics. Perhaps best of all, it shows how investors can improve their financial performance by having a better understanding of the brain.
"How To Make Money In Stocks" (2003, 3rd ed.) by William J. O'Neil Bill O'Neil is the founder of Investor's Business Daily, a national business of financial daily newspapers, and the creator of the CANSLIM system. If you are interested in stock picking, this is a great place to start. Many other books are big on generalities with little substance, but "How To Make Money In Stocks" doesn't make the same mistake. Reading this book will provide you with a tangible system that you can implement right away in your research. (For more about CANSLIM, see Trader's Corner: Finding The Magic Mix Of Fundamentals And Technicals.)
“How Markets Fail” (2009) by John Cassidy Cassidy, the New Yorker’s finance writer, neatly explains the psychological mechanics behind the herd behavior of markets, and like Shiller and Galbraith, shows that rational is often the last thing markets are. His use of London’s problem-plagued Millennium Bridge as a model of self-reinforcing market behavior is alone worth the read.
“All About Asset Allocation” (2010) by Richard A. Ferri Choosing the right asset allocation is probably the most important investment decision you’ll make. Ferri explains correlation, diversification, risk premiums and the efficient frontier—all concepts that are at the heart of the indexing strategy.
“The Power of Passive Investing” (2010) by Richard A. Ferri Ferri takes a comprehensive look at the active-versus-passive debate and makes a compelling case that indexing is most likely to lead to investor success.
“Millionaire Teacher” (2011) by Andrew Hallam Hallam was a highly successful stock picker, but that wasn’t the main reason he was able to amass a million-dollar portfolio. The blogger and schoolteacher explains why frugal living, diligent saving, and a diversified portfolio of index funds are the real keys to building wealth.
The more you know, the more you'll be able to incorporate the advice of some of these experts into your own investment strategy. This reading list will get you started, but it is only a fraction of all the great resources available. Do you have a favorite investing book that we've missed? If so, let us know.