The 5 Greatest Books for Investing & Money

• Benjamin Graham is the ‘Father of Value Investing’ & was the mentor of Warren Buffett. The Intelligent Investor is his most famous work. It was first published in 1949. The book has 3 core messages.

Intrinsic Value

• A stock is a piece of a business, which means that it has an intrinsic value.

Mr. Market

• The stock market swings from top pessimistic to too optimistic. A true investor does not react to Mr. Market as he expects.

Margin of Safety

• Decisions in the stock market must always be made with a built-in margin of safety. This means you should insist on buying stocks with a large discount on their intrinsic business value.

“Chapter 8 & Chapter 20 are all you need to do to get rich in this world.”

Warren Buffett

• Warren Buffett is often said to have been 85% Benjamin Graham & 15% Philip Fisher, & Buffett was inspired especially by this book, which originally is from 1958.

“The basic idea is that it was hard to find good stocks, & it was hard to find good investments, & that you wanted to be in good investments & therefore, you just find a few of them that you knew a lot about, & concentrate on those, it seemed to me such a good idea. 98% of the investing world doesn’t follow it.”

Charlie Munger

• Philip Fisher introduced Warren Buffett to the idea of buying great companies & holding on to them for forever & Fisher practiced what he preached. His & his clients, investment in Motorola allegedly became a 2000 bagger after he had held on to it for many decades.
• With 2000-bagger you only need $500 invested to become a millionaire.
• One of the highlights from the book is when Philip Fisher presents how individual investors can use Main Street resources to beat Wall Street. He advises serious investors to investigate companies by talking to their suppliers, customers, employees & best of all competitors.
•  He says that if you were to talk to the top 5 companies within a specific industry & ask each company about the other 4, you’d have a really good picture afterward of who the strongest player in the business is.

• It was originally published in 1989. Peter Lynch is a legendary investor from Fidelity Investments, & he was the manager of the Magellan Fund from 1977-1990. During this period he averaged a 29.2% annual return & grew the fund from $18 million to $14 billion.
• The book preaches that you should use what you already know to make money in the stock market.
• In general, if you polled all the doctors, a small percentage of them to be invested in medical stocks, & more would be invested in oil.
•  If you polled the shoe-store owners, more would be invested in aerospace than in shoes, while the aerospace engineers are likelier to dabble in shoe stocks.

• The highlights of the book are chapters 8 & 9.  In chapter 8, Peter Lynch discusses the 13 traits of a ‘ten-bagger’, referring to stocks that have a chance to increase tenfold. In chapter 9, he discusses 6 traits of the reversed ten-bagger, referring to stocks that are heading straight for the dumpster.

• Some of the characteristics of a ten-bagger which he insists in chapter 8 are quietly funny & a bit counter-intuitive such as ‘The institutions don’t own it, & the analysts don’t follow it it’s in a no-growth industry & something is depressing about it.’

• It just covers a lot more information. You’ll learn everything from the psychology of investing, to different types of securities, to the financial statements, to portfolio structure to stock movements. 2^nd edition of the book which is from 1940 has great examples.