In this our Information Age, its important toprioritise our reading!
Many friends keep referring me books on Investment & Life they like. And my usual question to them NOW, is can you please summarise for me in 1 or 2 paras, what did you retain as the essence of the book - essentially what did you learn from the book.
Their pointed answers, those who do take the trouble to do just that, always helps me prioritise.
Think it might be a good idea for us ValuePickr members to record brief comments on what exactly we picked up from the investing basics books we have read, which books we benefited the most from and why.
Which are the books we would recommend unhesitatingly to beginner investors, and perhaps in what order?
I am recording my top5 beginner investor books. Please pitch in with your favourites with brief comments, so we can all take quick decisions to enrich our reading lists!Beginner investors will perhaps benefit the most, if we do a good job of this, but am sure all of us will be the richer for it.
1.Five Rules for Successful Investing, Pat Dorsey
I wish this book was the first on my reading list. If you want a practical do-it-yourself, step by step tutorial on how to analyse/research a stock in-depth, this is a no contest, hands down winner! My learning curve shot up tremendously after I read this book. By following Pat Dorsey’s framework and applying it diligently (took me a month) I came up with this Opto Circuits Stock Research
Earlier my investment arguments could not/did not hold the attention of seniors. They would usually pick this or the other hole. That’s because I lacked a holistic framework. Suddenly I was talking to them at their level; could hold a meaningful discussion. A big jump for me!
2008: Recommended by Subhankar Ghose, Kolkata; remain eternally grateful
Fascinating first read for me, loved the depth of this book.
Important concepts like “Margin of Safety” and “Mr Market” got driven home. Learnt how to AVOID the usual mistakes!!
2005: I started out with this one and the Peter Lynch book, in tandem.
3.One up on Wall Street, Peter Lynch
This one made investing look so easy. One really didn’t need to be a hot-shot analyst to spot winners!
2005: I learnt that it is very much possible to find success on the street, if we keep our eyes and ears open (where are the crowds). ICICI Bank, HDFC Bank and Amalgamated Beans (Cafe Coffee day parent) interested me, as a complete newcomer like me tried to apply the Lynch principles.Bought and read along with Intelligent Investor.
4.Common Stocks Uncommon Profits, Phil Fischer
Got some insights into how to separate the wheat from the chaff! The novice got really interested in identifying probable multibagger candidates:)
Found it real hard to apply! Nevertheless the book is a fascinating read, and my interest in identifying excellent businesses got kindled.
2006: The 3rd book I read. By this time I was making excel spreadsheets, computing ratios on margins, profitability, efficiency, trying to hard-code the theory I was learning:), and spraying around the excel sheets, to anyone who cared to comment!
5.The future for Investors, Jeremy Siegel
Regular Dividend Re-Investment and staying Invested a in consumer-facing branded Pharmaceutical, FMCG and Tobacco companies has proven to be the best Long-Term Investment strategy of all-time, revealed Prof. Jeremy Siegel’s outstanding research for the US market.
My eyes opened to the importance of Dividends, for the first time. 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!
2007: Recommended by Rohit Swaroop, one of my earliest mentors (and the inspiration behind ValuePickr), this is the 4th book I read. I hunted for similar data/study on stock returns by Indian companies, and was delighted by the Motilal Oswal Wealth Creation studies. Not surprisingly, I found similar conclusions - Cipla, Ranbaxy, ITC, HUL, HDFC were among the biggest wealth creators in Indian markets, apart from the IT behemoths.
Current take : As I was penning this down, I realised I have **never attempted a proper re-read **of any of these books. Many seniors tell me they keep re-reading Graham, many others have read Peter Lynch atleast 10 times, that’s how they identified a Jubilant Foodworks, etc.
Not to re-read over time is criminal for a passionate analyst, I guess! So as I attempt a re-read of all these books,I reserve the right to revise any/all of my comments above:). Some perspectives will surely change as I re-read now from more mature (?) eyes.