10 must-read books for stock market investors and why

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Published: May 28, 2016 5:10:06 PM

It can be difficult to narrow down the best investing books, there are more than 75,000 books written just on market behavior and the various aspects of investing.

It can be difficult to narrow down the best investing books, there are more than 75,000 books written just on market behavior and the various aspects of investing.

More often than not these books deal with age-old concepts which were once a fad and have long been forgotten. In this particular article, I would like to focus on books which have stood the test of time and are absolute classics. I will also be omitting books which specifically focus on investment methods like technical analysis for instance, to any proponent of market action being random, reading about techniques which are based on the likelihood of chart patterns repeating themselves might not prove a prudent use of one s time or efforts.

If you are looking for something that will improve your ability as an investor, here are some books I liked and feel could useful to learn about investing. Keep in mind that if investing were easy as buying a book and reading it, we could all be rich.

A Random Walk Down Wall Street

This was written by Burton Malkiel back in 1973. Yes, that was over 40 years ago but his concepts still hold true today. In fact, I would list Random Walk as a must-read book for both beginners and seasoned investors alike.

What makes Random Walk one of the best investing books is that it simplifies difficult material for anyone to understand. That can be a difficult to do, but Malkiel does it in style and offers methods to follow that’ll help you as you begin investing in the stock market.

Thinking fast and slow

Thinking, Fast and Slow is a best-selling 2011 book by Nobel Prize in Economics winner Daniel Kahneman which summarises research conducted over decades, often in collaboration with Amos Tversky. Kahneman takes us on a groundbreaking tour of the mind and explains the two systems that drive the way we think. System 1 is fast, intuitive, and emotional; System 2 is slower, more deliberative, and more logical.

The Intelligent Investor

This book was written by Benjamin Graham in 1934, What makes Intelligent Investor one of the best investing books for beginners is that it talks at length about how to focus on the long-term health of a company or holding as a way to limit your risk. Again, the focus is on long-term wealth-building strategy and not chasing gains. If that’s not enough, Graham was Warren Buffett’s mentor so you know he knew a little bit about what he was talking about.

Common Stocks & Uncommon Profits

This book by Phili Fisher outlines the philosophies held by him, an influential and oft-quoted investor. Warren Buffett said that this book “enables one to make intelligent investment commitments.”

Reminiscences of a Stock Operator

Reminiscences of a Stock Operator is a 1923 novel by American author Edwin Lefèvre which is the thinly disguised biography of Jesse Lauriston Livermore. This book dwells into the psychology of a stock trader.

Buffett: The Making of an American Capitalist

This book by Roger Lowenstein sheds insight into the ways and means of the Oracle of Omaha. Warren Buffett’s thoughts are insightful and his methods may yield fruitful rewards for investors with enough patience to learn them, understand them and apply them correctly.

Market Wizards

This book by Jack Schwager contains four parts covering interviews with traders in a wide range of markets. The interviews contain a mixture of facts about the trading careers of the interviewees, their philosophy, and many trading anecdotes.

Japanese Candlestick Charting Techniques

This book by Steven Nison explains in easy-to-understand language, author’s years of study, research and practical experience in this increasingly popular and dynamic approach to market analysis.

Fooled by Randomness

This book by Nassim Nicholas Taleb deals with the fallibility of human knowledge. Taleb through his book sets forth the idea that modern humans are often unaware of the existence of randomness, as they tend to explain random outcomes as non-random.

Extraordinary Popular Delusions and the Madness of Crowds

This book by Scottish journalist Charles Mackay, first published in 1841, chronicles its subjects in three parts: “National Delusions”, “Peculiar Follies”, and “Philosophical Delusions”. MacKay was an accomplished teller of stories, though he wrote in a journalistic and somewhat sensational style.

Bear in mind, my investment philosophy is based more on reading crowd behavior and behavioral finance, most reading materials in the above mentioned list will focus on being able to gauge sentiment as compared to other investing techniques popularised by modern day technical analysts.

Nikhil Kamath is Co-Founder & Director – Zerodha. Views expressed here are personal.

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