Reading has been a major source of information and knowledge in my investment journey. There are however many different kinds of books recommending different approaches towards investing.
I shall not claim to be an expert on recommending the best books that everyone should read, but I do think that some books have affected my investing philosophy much more than other books. (Take note that I am largely a passive income investor looking to expand my wealth through value stocks with growing dividends at cheap prices.)
THE FUTURE FOR INVESTORS: WHY THE TRIED AND THE TRUE TRIUMPH OVER THE BOLD AND THE NEW by Jeremy J. Siegel
This book essentially shaped my philosophy in investing. Although many other books mention similar strategies as this does, few actually go to the extent of providing substantial historical evidence for why their methods work. This book uses historical statistical evidence to postulate the best investment strategy for earning returns larger than the stock market. The book proves statistically why stocks are the superior investment instruments, why stocks in high growth industries are not necessarily the best performing stocks (the value trap), why the price you pay for stocks matter, etc.
THE FINANCIAL TIMES GUIDE TO VALUE INVESTING: HOW TO BECOME A DISCIPLINED INVESTOR by Glen Arnold
This book provides a great overview of value investors’ approach towards investing. Many fundamental concepts are covered in this book and the variances of philosophies by the great value investors of history are covered as well. The Valuegrowth Model that I am using is also taken from this book.
WHY MOATS MATTER: THE MORNINGSTAR APPROACH TO STOCK INVESTING by Heather Brilliant and Elizabeth Collins
This is a book that I am currently reading but much of what is shared in this book has made a significant impact on how I analyse businesses. It is easy for anyone to look at a company’s historical track record to see if they have done well but always remember that history is not always a good reflection of the future; strong historical growth may not always translate to strong future growth. The difference here lies in whether or not the company can sustain their moat (competitive advantage) and how long into the future they can do so. This is the central idea of this book.