My Top 5 Investment Basics Books, & why?

Books & Tutorials
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Thanks. Was looking for a book on this subject actually. Looks like there is also a Part 2 of this book though it is currently out of stock on Amazon.

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Adding two more books which i have found good.

100 Baggers: Stocks That Return 100-to-1 and How To Find Them

Capital Returns

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The concept that expectations are usually built-in in the stock price, and that my returns depended on the gap between expectations and actual results delivered by the company, got home!

Given this comment, I am curious your thoughts on “Expectations Investing” from Michael J. Mauboussin.

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Thanks for bringing Michael Mauboussin up. I am a huge fan.
Sometimes, just one incremental key concept is all we need for a level jump!
Expectations Investing is one such.

That Expectations are all in-built in the price. And that only if Business Performance exceeds these expectations, will there be good to great investment returns. And therefore, we always like to look for and/or prioritise investment prospects that seem to indicate big Price-Performance GAPS for the near and medium term.

Not sure if i bought the book. Bust sure as hell I mopped up all I could from http://www.expectationsinvesting.com/
if there is one thing I incorporated it is the PIE - Price-Implied-Expectations calculations in may base Excel
http://www.expectationsinvesting.com/tutorial9.shtml

I find Maubuussin - the way he elucidates key concepts as very tangible, insightful, and easy to put into practice. It might not be an exaggeration to mention that after reading the top 5 books MOST of my incremental learning has been thru the easily accessible Michael Mauboussin published work at Credit Suisse. Thanks for bringing that up!!

Essential Reading for any maturing investor!
For those interested in a ramp up/sharpening the saw on key investing concepts, nothing more valuable than this whole compendium available here (and you can directly search at Credit Suisse site later, as you get hooked)

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@wexler @Donald

Today’s price depends on expectations from the business as of today, and future price depends on the expectations from the business at that point of time. Therefore, changes in expectations is what drives investor returns. This is the message I took home from the book.

The book also provides a beautiful framework for analysing businesses. The Reverse DCF method, which starts with the current market cap and arrives at the expectations built into the stock price is also elegant. It is intuitively much easier to grasp than the traditional DCF which requires estimating future growth rates and cash flow. Awesome book!

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155

Below details are not about a book , but since there is lot discussion around Pat Dorsey … I am giving a link to video Why Moats Matter by Pat Dorsey

this 30 mins video is power packed , full of information …

I will also update the same in Great articles to read on the web thread

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156

For those interested in banking and insurance investing, this is a good read.

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Here are a few that haven’t been mentioned recently and are fascinating:

  1. Fortune’s Formula by William Poundstone
  2. Market Wizard series by Jack D. Schwager
  3. Margin of Safety by Seth Klarman (Tough to find book; very high retail price)
158

Found two good books for an advanced equity investor:

Capital Returns -Edward Chancellor
Investing for Growth - Terry Smith

Also, Differentiate or Die by Jack Trout is super read
The 22 Immutable Laws of Marketing —These two books would add lot of value when looking at B2C stocks.

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159

Few books that I enjoyed reading and would recommend :
Dhando investor
Art of execution
Free capital
100 baggers
Only the best will do
Common stocks and uncommon profits
The Little book that builds wealth
The eductaion of a value investor

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160

I don’t know why you would rate the intelligent investor as an over rated book. Perhaps maybe because it appears dated. In my view a close reading of Benjamin Graham is all that is required if you want to firmly grasp the mechanics of valuation. His books are full of tricks, tips and formulations (for example debt capacity bargains), for the average investor. His works are also full of surprises and aha moments.

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161

In 2011 I had mentioned few books that I found interesting. Since then I have read tons of books and thought I share some of the books that helped me evolve as an investor. I have segregated the books as per level of maturity as investor. It is not hard and fast rule. Feel free to disregard my categorization. Assume latest edition for the books unless mentioned.

Beginner Investor

  1. Intelligent Investor by Benjamin Graham
  2. Thinking Fast and slow by Daniel Kehnman
  3. The Warren Buffett way Third Edition by Robert Hagstrom
  4. Financial Statements, Third Edition: A Step-by-Step Guide to Understanding and Creating Financial Reports By Thomas Ittelson (Perhaps the best and easiest book to understand accounting basics and statement preparation)
  5. One Up on Wall street by Peter Lynch
  6. Thinking in Bets by Annie duke (How decisions are made in uncertain environment)
  7. Investing for Growth by Terry Smith (British investor with terrific track record since 90s (18 to 19% CAGR). Quality and Growth stock investor. Also watch youtube videos)
  8. What works on Wall Street - James O’Shaughnessy (4th edition)
  9. The Most important Thing By Howard Marks
  10. A Zebra in Lion country - By Ralph Wagner

Intermediate level

  1. Five Rules of Stock Investing by Pat Dorsey (Explains DCF valuation and concept of MOAT )
  2. Accounting for Value by Stephan Penman (Decisively proves that mere EPS growth is NOT equal to Shareholder Value creation)
  3. Competition Demystified by Bruce Greenwald
  4. The Essays of Warren Bufffett
  5. Capital Returns by Edward Chancellor
  6. Poor Charlie’s Almanac By Charlie Munger
  7. Pitch the Perfect Investment by Paul sonkin and Paul Johnson (They teach value investing course in Columbia business school and wrote this book for that course)
  8. You Can Be a Stock Market Genius By Joel Greenblatt
  9. Common stocks and uncommon profits by Phil Fisher (If this is heavy then other good option is Terry smith’s book)

Advanced level

  1. Financial statement analysis and and security valuation by Stephan Penman (Not for faint hearted I agree)
  2. Value Investing: From Graham to Buffett & Beyond by Bruce Greenwald et al.
  3. Valuation: Measuring & Managing the value of companies By Tim Koller et al McKinsey & Company (Perhaps the best book on various Valuation methods)
  4. Expectations Investing by Maubaussin and Rapaport (Shows that Market price embeds critically useful information about the market expectations and how to use it)
  5. Financial Shenanigans 4th Edition by Schilit and Perler
  6. Creative cashflow reporting by Charles Mulford
  7. Devil take the hindmost By Edward Chancellor (Centuries of History of booms and busts caused by Credit cycles)
  8. Principles of Economics By N. Gregory Mankiw (For both Macro and Micro economics)
  9. Quantitative Value by Wesley Gray
  10. Options as Strategic Investment By Lawrence McMillan
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162

Please suggest any good book recommendations to understand financial statements in detail and how parameters in P&L statement, Balance sheet, Cash flow statement are interlinked with each other and how numbers flow from P&L statement, Cash flow statement flow into Balance sheet during the whole year.

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I have no idea about book; but https://www.drvijaymalik.com/ may be useful. It helped me immensely to understand financial jargon you indicated - free of cost.

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164

Romancing the Balance Sheet (2nd Edition) Book by Anil Lamba - Book for Beginners

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how parameters in P&L statement, Balance sheet, Cash flow statement are interlinked with each other and how numbers flow from P&L statement, Cash flow statement flow into Balance sheet during the whole year. Is this type of analysis required for selection of companies?

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167

Can anyone suggest a book on technical analysis? something for beginners.

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  1. Technical Analysis Explained by Martin J Pring
  2. Technical Analysis of the Financial Markets by John J Murphy

Both are great book for beginners.

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Okay so here goes my short list :slight_smile:

  1. CMT Level I 2021: An Introduction to Technical Analysis - for professional traders, a really profound deep dive

  2. Investment banking by Joshua Rosenbaum - that’s for professionals as well, best book on the topic 100%

  3. The intelligent investor - an evergreen classics, though some ideas might be in contradiction with the modern super-accelerated Tech companies growth rat

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170

In Addition to above books

  1. Coffee can investing by Saurabh Mukherjee
  2. The Dhando investor by Mohnish Pabrai
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