Sunday, September 20, 2015

Great Investors are Voracious Readers

I have been studying accounting, business, companies, economics, finance, history, industries, investing, math, philosophy, psychology and science, among other topics in earnest in for several decades. The acquired knowledge is humbling as I have barely scratched the surface of knowledge here. The farther one travels the less one knows.

My humble opinion is that you cannot succeed over time as an investor without reading in these areas and others. You will need to read extensively over the entire course of your investing life. Intellectual independence and curiosity is a common trait of successful investors. Furthermore, you will need to specifically learn how to read as an investor due to the massive amount of information flowing at you on a daily basis. Learning how to process and use information is a critical skill for successful investors. More on this later.

I learned accounting by earning a CPA certificate in national CPA-Consulting firms. I also learned about business as well as a large number of companies and industries. If you have not done this, it is safe to say that you will not need to become a CPA but will need to learn accounting which is the basic language of business and a required skill needed to read company financial reports (a significant activity for advanced investors), among other things. Knowledge of businesses, industry and business models, etc. is important. I also added to my knowledge base by studying the CFA body of knowledge for levels 1 and 2 of the CFA program.

Listed below is part of my historic reading list in select areas of investment and finance relevant to individual investors. I consider this list to be foundational in nature and critical as the starting point for the development of the essential knowledge needed to be a serious investor:

  • All the major books written about Warren Buffett over the past 25 years plus Berkshire's annual reports - letter to shareholders.
  • Most of the major writings written by and about Charlie Munger.
  • All of Peter' Lynch's books. In the case of "One Up On Wall Street" about 10 times.
  • George Soros, "The Alchemy of Finance."
  • David's Swensen's, "Unconventional Success" written for individual investors.
  • Peter Bernstein's book about risk titled "Against the Gods."
  • Marty Whitmans's books on value investing.
  • Jack Schwager's trader interview-investor book "Market Wizards."
  • Charles Ellis, " Winning a Losers Game,"
  • Howard Marks, "The Most Important Thing."
  • Robert Menschell, "Markets Mobs & Mayhem."
  • Aswath Damodaran, "Investment Fables", "Investment Valuation" and others.
  • John Mihaljevic, "The Manual of Ideas."
  • Guy Spier, 'The Education of a Value Investor."
  • McKinsey & Company, "Valuation."
  • The books and writing of John Bogel, founder of  The Vanguard Group.
  • Benjamin Graham, "The Intelligent Investor" plus Graham and Dodd's "Security Analysis."
  • Joel Greenblat, "You Can Be a Stockmarket Genius."
  • John Train, "The Money Masters."
  • Peter Tanous, "Investment Gurus."
  • Dimson, March and Staunton, "Triumph of the Optimists."
  • Michael Mouboussin, various research reports and books ("Expectations Investing" and "More than You Know").

People who are serious about developing basic knowledge and skills needed to become skilled investors should start with this list and find their own path. Please keep in mind that this list is not complete and is viewed as a starting point. My actual list is longer and I have put this together based on my recollection of books that have had the biggest influence on me over several decades. I have reread many of the books listed here. I will add to this list over time. This list is the beginning as there is work to do in other areas to acquire basic and more advanced technical skills essential to the art/craft of investing. Please note that my focus here is on books as I will address other key reading/information sources in future posts.

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