Monday, July 26, 2010

Some good books worth reading...

"A man who does not read good books has no advantage over the man who cant read!" So says Mark Twain.. And it is so very true. There is a world of knowledge out there. And its yours if you choose to.
Personally, I love to read. Due to time limitations, I read books about investing and psychology only. These books have taught me a lot. They have awed me, humbled me and I have communicated with the greatest minds on earth through these books! Here is a list of good books you also can read and learn from. For simplicity sake, I have categorized them based on various criteria. The order in which the books are mentioned has no significance whatsoever.

The Buffett/Graham/Munger category:

1) Security Analysis - Graham & Dodd
The original text of value investing, first published in 1934. The book is currently in its sixth edition and it is still on the best-sellers list. It is proof that investing is indeed timeless. The book is extremely technical in nature. Readers who are not serious will find it daunting. (To be frank, boring!)

2) The Intelligent Investor - Graham
The follow-up to the Security Analysis book, The Intelligent Investor is yet another classic. Much more simplistically written, I believe it is a must-read for any budding investor.

3) Buffettology/The New Buffettology - Mary Buffett
An excellent book to read about Warren Buffett. Written in simple language.

4) The Snowball - Alice Schroeder
Size-wise, this is the biggest book on Buffett! :-) Personally, it was not big on value addition, for me. After reading this book, one's respect for Buffett as a human being and family man (not as an investor) would surely come down.

5) Poor Charlie's Almanack - Munger
Reading this book has been quite an experience. It takes a huge amount of mental effort to understand and absorb this book. Munger is amazingly smart, equally funny and kinda whimsical.

6) How to pick stocks like Warren Buffett - Timothy Vick
Gives a step-by-step and simplified analysis of Warren Buffett's stock picking approach. But, do remember that understanding Buffett is comparatively easy, implementing Buffett is damn difficult.

There are countless books written on Buffett. Be careful about choosing which one to read. Most of them contain the 'Buffett' name just to sell the book.

The Value Investing/Investing category:

1) Common Stocks & Uncommon Profits - Phil Fisher
One of the best books on investing, imho. Fisher should be called as the Father of Simplicity! Reading this book will change your whole outlook towards investing and how you look at companies.

2) Value Investing: From Graham to Buffett and beyond - Bruce Greenwald
Another amazing book. I have been fortunate enough to attend a seminar by Prof. Greenwald and hear him talk. It was a great experience. Definitely a book worth reading.

3) Value Investing - James Montier
For me, Montier is a rockstar! He is one of the world's leading authorities on Behavioural Finance, a subject close to my heart. Montier's work on value investing is also very much worth reading.

4) The Little Book of Value Investing - Christopher Browne
An amazing book. Simplifies the 'investing in a business' approach to a great extent.

5) The Focus Investor - Rockwood
Though not strictly a book on value investing, this book provides an altogether different approach to investing by combining varied investing philosophies. Surely worth reading.

6) The Dhando Investor - Pabrai
For me, this is a coffee table kinda book. Imho, the book is over-rated.

7) Margin of Safety - Klarman
This has to be on your must-read list. An amazingly written book on the concept of margin of safety, which is central to the value investing philosophy.

8) One up on Wall Street - Peter Lynch
9) Beating the Street - Peter Lynch
Both are good books by a very street-smart investor. Lynch was not at all in the value-investing camp, but he earned phenomenal returns (the best ever) as a mutual fund manager.

10) Reminiscences of a Stock Operator - Edwin Leferve
This is not a book on investing as such, its written by a hard-core trader. But its an amazing and wonderful read. One can learn a great deal about the psychology of the markets from this book.

11) Its when you sell that counts - Cassidy
One of the very few books written on the art of selling! Contains a lot of stuff on behavioural finance too.

The Behavioural Finance/Psychology category

1) Predictably Irrational - Dan Ariely
A superb book for anyone interested in psychology. Full of examples and experiments.

2) SWAY - The irresistible pull of Irrational Behaviour - Braffman
Well, the title says it all, doesn't it?

3) Panic - Michael Lewis
A history of how markets panic. Will help you to be ready next time!

4) Behavioural Investing - Montier
Another excellent book on the application of behavioural finance in investing.

5) Seeking wisdom: From Darwin to Munger - Peter Bevelin
Another fascinating book, written in an interesting way.

6) Chaos - James Gleick
A very very complicated book imho. Not directly related to investing, but covers multiple fields and aspects.

7) The (mis)behaviour of markets - Mandelbrot
This book takes a look at the classical financial and valuation models and theories and then takes them apart!

The Entertaining Category

1) Liar's Poker - Michael Lewis
A hilarious look at what happens in a typical investment bank. Amazing book.

2) Where are the Customers' Yachts - Fred Schwed
Another excellent and entertaining take on how Wall Street operates. A must-read.

3) Fooled by Randomness - Taleb
4) The Black Swan - Taleb
Taleb's books take time to understand and digest. But are very absorbing. These two books always help me remain within my aukaad! :-)

5) Damn Right - Janet Lowe
This shouldn't really be in the entertaining category, but I personally found it amazingly entertaining. Anyways, anything on Munger has to be witty and entertaining! Do take a look.

These are few of the books I have read and I would recommend that you also take them up. It would be a life-altering experience. I am in the process of reading more books and would update any good books I come across.. Currently, after going through a Montier phase, I am taking up The Art of Strategy which was sent by my good friend Carlos. Btw, Carlos, if you are reading this, I expect a huge number of comments (a.k.a. brickbats) from you, since 'books' is a matter close to your heart. :-)

Cheers and happy reading!!

P.S. I do not have a soft copy of any of the books, so kindly do not ask me to email soft copies n stuff..


sreenath vijayan said...

THANX SIRJI........goood ones....

hahahhaa and ur a smart one to write the P.S note.....ahhaah

Neeraj Marathe said...

thnx Sreenath..ya, i think the P.S. thing was necessary! :-D

Siddharth said...

Hi Neeraj,
Nice list, i have a couple of questions for you:

1. Is there any preferable order to read these books or book Value investing first..Behavioral next & then entertaining.

2.The more important question is how does one balance time between reading books & Annual Reports(researching/digging about a company). I have always fallen for the easier task of Reading books & missing out on implementing it by doing the to be frank its much more boring than reading.

Any suggestions regarding the above would greatly benefit me.

Also,Found books on Accounting missing..don't u feel non-finance people need some basic accounting knowledge also to be good investors??

Sarada said...

From the behaviour psychology list the book i started and could not finish is "Chaos". Somehow could not wade through the nonlinearity I suppose. About the rest I loved Predictably Irrational. And I own Panic,Mandelbrot which i intend to read. Nice list by the way.

Neeraj Marathe said...

Hi Siddarth,
Thnx for raising extremely relevant are my thoughts on the same..
1)regarding the order of reading, u will also appreciate that the subjects of behavioural finance and investing are extremely interlinked and cannot be prioritised. However, i would definitely recommend reading books like The Intelligent Investor, Little Book of Value Investing and Common Stocks Uncommon Profits first. These are excellent books for anyone to begin with. In most of these books, u will anyways find traces of investment psychology blended with the relevant topics. Books like Poor Charlie's Almanack, and those by Montier take time and effort to understand and absorb and should be read only after having some basic firm foundation.

2)The second question is very hard to answer, specially since such stuff is very relative. I personally read 300-400 ARs every year, in addition to different books, newspapers and magazines.. This takes up a huge amount of time and mental effort. (My wife will vouch for the same! Fortunately, she is the adjusting type..) One never gets enough time, one has to MAKE TIME to do it.

3) Basic accounting knowledge is an absolute must, specially since a lot of Indian companies are very creative when it comes to accounting. ;-) But since such books are more on the academic side, i chose not to mention them. For people with no accounts background, i would suggest picking up Std.11th to T.Y.B.Com accounts text books! Seriously, those would be the best. Do not try n read up any books on this topic by foreign authors, since it may not be relevant in the Indian context..

Cheers and thnx for participating!

Neeraj Marathe said...

Thnx Sarada..
I agree that Chaos is quite a chaotic book to absorb..i also had a tough time wid it..i havnt read Mandlebrot, thnx, will look into the same.

Raja said...

Nice one Neeraj!!

As a wannabe value investor i have just begun with reading books and various blogs. I stumbled upon your blog today from TIP Blog's recommendation.
Currently am reading 'the intelligent investor' and was looking for what to read next... ur post solved the problem !!


Neeraj Marathe said...

Glad to be of help Raja..

Best Poker Listing said...

Thank you for your hard work and sharing it with us. It goes well appreciated in my book.

Unknown said...

Dear Neeraj,

Modern Portfolio Theory and Investment Analysis by Edwin J. Elton, Martin J. Gruber, Stephen J. Brown and Using economic indicators to improve investment analysis are also some you can add to your list of 'Must Read'. These give you the overall picture of how the dynamics of investment are changing today and how the economy affects invester's psychology on a bigger level. These were recommended by a very well known figure in the indian stock market..and.. why dont you write 1 interesting topic from above books as a new topic on your blog... it would be really interesting to read your revies and thoughts with respect to it... plz.. if you can do this for us, nothing like it.. sir

Neeraj Marathe said...

Thnx a lot for the very constructive feedback. will surely keep it in mind..

Unknown said...

yes sir.. i will wait for your next topic after till you get it from your mind to the blog

take care sir

Anonymous said...

Hi Neeraj,

Good initiative.

I am from science background.
Will u suggest any SIMPLE TO READ book on "Reading Indian Financial statements".


Anonymous said...

Hi Neeraj,

Good initiative.

I am from science background.
Will u suggest any SIMPLE TO READ book on "Reading Indian Financial statements".


Neeraj Marathe said...

Hi Ramesh,
There are several books by Indian authors on this topic...u will find them in almost any read up books by Indian authors only..

satish said...

Also do check out "The wolf of wall street"


Neeraj Marathe said...

Thnx Satish,
Didnt know about that one..will chk it out..

P. Atkins said...

You have posted a very interesting article. Keep it up!

Good Books To Read.

Neeraj Marathe said...

Thnx Percy..
Glad u like it..

Unknown said...

Sir can u pls suggest how to find good stocks for investment.what ratios should be used to find on to find value of stock.

Neeraj Marathe said...

Sorry buddy, i have stopped writing due to SEBI's research analyst and investment advisors regulations.