Peter Lynch is one of the most successful stock market investors and hedge fundmanagers of the past century. He started out as an intern at Fidelity Investments in the mid-1960s. Nearly 11 years later, he was tasked to manage the Magellan Fund, which at the time had close to $18 million in assets. By 1990, the fund had grown to a whopping $18 billion in assets with nearly 1,000 stock positions. During this time, the fund boasted average returns of more than 29% per year.
"Beating The Street" allows the reader to peek into Lynch's mind and thought processes in terms of deciding whether to buy or sell a stock. Lynch believes that an individual investor could exploit market opportunities better than Wall Street, and encourages investors to invest in what they know.
"The Intelligent Investor" (1949) by Benjamin Graham
This book was written in 1949 and has been hailed by Warren Buffett as the best investing book ever written. Benjamin Graham is considered the "father of value investing." This paradigm advocates the purchase of stocks that appear under-priced relative to their inherent value, which is determined through fundamental analysis.
Graham delves into the history of the stock market, and informs the reader on conducting fundamental analysis on a stock. He discusses various ways of managing your portfolio including both a positive and defensive approach. He then compares the stocks of several companies to illustrate his points
From The Tactical Investor
I have yet to read one technical analysis book that I was not inclined to throw into the trash can. Over the years, I looked at many books that covered this topic, and have found nothing of value out there. There are some books, with great pictures but other than that they contain nothing of value. Almost every author seems to want to go out of his or her way to make the subject look complex. Secondly, half the studies they mention are useless, and I am being conservative. Here are some simple examples, Head and shoulders pattern, rising wedge, bull flag, cup and handle, and a host of other nonsense.
Let’s also not forget about the silly omens these books like to brag about, like the almighty useless death cross or the infamous Hindenburg omen, etc.. You would be much better served if you can master the art of drawing a simple trend line.
Here is what we would recommend
As for what books we would recommend, be prepared to laugh at first because you will assume I am joking; a good healthy dose of laughter is always a good thing
One of the best books for novice traders is “Aesop’s fables”. It contains a plethora of stories that deal with the topic of Mass psychology and in a straightforward format. If traders put half of the concepts discussed in those fables to practice, they would fare much better. For example:
The boy who cried wolf (perfect illustration of today’s experts)
The hare and the turtle (a great illustration of the slow but sure concept)
Preferred Reading list
Michel Montaigne; read the abridged version
Herman Hess (this is optional but can prove to be insightful choose a random book by this author)
Extraordinary popular delusions
The madness of crowds and Psychology of the Crowds by Gustav Le Bon
Understanding the basics of Mass Psychology could go a long way in improving your investment journey. Here is a brieft excerpt on the topic:
Mass psychology is the study of group behaviour; the mass mindset draws comfort when it does not go against the views held by the majority. For example, an investor feels comfortable buying biotech stocks because the crowd thinks it’s a good buy. In other words, they are acting like lemmings; they are following the herd mindset. In the markets teamwork does not pay; when the Continue reading best investing books