Most people might consider me a know-it-all, but I love studying and learning. I know many people who consider themselves to be serious investors because they watch all of the talking head financial news shows and follow every, “hot stock tip,” newsletter of note. This is not wise investing.
I think you must understand the market, understand value, and invest on your own terms. New York City-based finance expert Douglas Boneparth notably tweeted that anyone with $1,000 asking for investing advice shouldn’t invest. Boneparth believes that people should save their money, learn about the stock market, and do their own research.
According to Boneparth, if you have to ask for a hot stock pick, you aren’t ready to invest. Instead of rushing into investing, it might be better to learn about investing. Here are some books I recommend you check out to learn important investor skills.
If You Can by William J. Bernstein
Bernstein’s book is about 16 pages long and qualifies more as a digital pamphlet than a book. If You Can was designed to offer readers complex investing ideas crystalized into simplistic information that even a child could comprehend. Best of all, you can get this book for free as a download at the sites that offer it, including the author’s official website.
Margin of Safety: Risk-Averse Value Investing Strategies for the Thoughtful Investor by Seth Klarman
Klarman is a legendary and reclusive hedge fund manager who is an advocate of value investing and teaching the basic tenets of such to investors. Value investing is the art of strategically recognizing the true value of underpriced and underperforming stocks that are ignored by fad-chasing investors.
Klarman wrote Margin of Safety in 1991 and endeavored to explain value investing in an accessibly comprehensible way. Only 5,000 copies of the book were printed in 1991. The book didn’t sell well in that era. Since then, the book has assumed a fevered cult status for its now appreciated knowledge.
The book is now infamously coveted by knowledge-hungry investors willing to pay anything to get one of the few existing copies. Due to high demand, the cheapest hardcover version of this book available on Amazon sell for about $800. Paperback versions sell for $1,500.
The Bogleheads’ Guide to Investing by Taylor Larimore, Mel Lindauer & Michael LeBoeuf
John “Jack” C. Bogle is a renowned expert in index funds investing and the founder of Vanguard. Bogle wrote this book in a plain manner to easily explain passive investing and mastering other investing strategies. A, “Boglehead,” is a nickname for fans of Bogle who zealously follow his advice.
A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing by Burton G. Malkiel
Malkiel’s book asserts that new investors should strategically analyze current investing trends to discern the true value of stocks. This book informs readers that they need to understand and engage the stock market in an informed and strategic manner. Malkiel cautions investors against solely looking for inefficiencies in the system to take advantage of as an investing strategy.
There is Nothing Fast and Easy With Investing
Investing is a not a game like the lottery. You are not going to get a hot stock tip and become a millionaire overnight. It takes time to receive a return on investment. That is why you see so many articles saying how much money you would have now if you bought Facebook or Amazon stock a decade ago.
By the way, if you bought $1,000 worth of Amazon stock in 2009, it would be worth $23,600 today. If you bought $1,000 worth of Amazon stock in May 1997, it would be worth $1.3 million today. That is the point of investing. People peddling hot stock tips have their own agendas.
You should research and know value when you see it, especially when others don’t. Also, you should be in it for the long haul.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.