Still need a few gifts and don't know what to get for that investor on your list, or are you an investor looking for something good to read during the holidays? Here are some suggestions.
The Intelligent Investor - by Benjamin Graham, updated by Jason Zweig
This classic should be on every investor's reading list. It teaches us how not to lose money in the market, both from the technical standpoint of assessing accounting and business factors to the psychological discipline required. If we can absorb and adhere to the lessons within, we can aspire to doing as well as Graham's most famous disciple, the multi-billionaire Warren Buffett.
Stock Market Superstars by Bob Thompson
A dozen of Canada's most successful stock-picking fund managers say how they do it in a series of rollicking free-form interviews which entertain and educate about how to succeed by being different from the herd. Not many investment books can make you laugh but this one does with the irreverent, no-punches pulled comments by the superstars.
Financial Statement Analysis (4th edition) by Martin Fridson and Fernando Alvarez
For the more advanced investor, once you want to get into the ins and outs of financial statements and the tricks of the accounting trade in order to assess companies and stocks yourself, this book will help enormously. It assumes you know the basics of income statements and balance sheets but you don't have to be a chartered accountant to follow along. Highly readable for the layman despite the subject matter, it tells us how to protect ourselves and spot trouble by taking account of the motivations of company managers.
Understanding Wall Street (5th ed) by Jeffrey Little and Lucien Rhodes
If you need something simpler to get started, whether it is to understand accounting statements or how markets and investments work in general, this is the book to buy. Very practical and intuitive with many simple examples, it can be read through or used merely as reference.
No Hype - The Straight Goods on Investing Your Money, 2nd edition by Gail Bebee
Here's another book that covers basics, but this one is aimed specifically at Canadians. It includes a brief rundown on everything from the types of investments out there (stocks, bonds, GICs, mutual funds, ETFs etc), the various accounts (RRSP, TFSA, RESP, taxable and so on), taxes on investments, annuities, advisors, the list goes on. There is little missing the average investor could want to know about. The book even includes sample portfolios, ranging from the ultra-simple starter to complex with individual stocks and with differing levels of conservatism.
Behavioural Technical Analysis by Paul Azzopardi
We've all heard that our own worst enemy in investing is not the market or some outside agency but our very own selves. We buy when we should sell and sell when it it time to buy. Lots of research has been done into the errors we make and there are some quite well-known books about how and why our behavioural errors happen. But no book does as good a job at explaining them and fitting them together coherently as does this one. The value for the investor is obvious - understanding can lead to fewer costly errors.
What Kind of an Investor Are You? by Richard Deaves
Those who take pleasure in their investing and are good at it may find it hard to believe that many people don't have the interest, time or skills to do respectably at it. If you are among those "many", here is a book that will guide you to figure out whether to simply rely on an advisor (and if so, how to pick a good one, since a bad one could wreck your financial future) or to do-it-yourself. If you are a DIYer there is guidance on how to build a sensible strategy based on Canadian ETFs or mutual funds. The book's advice is brief, simple and practical.
Unconventional Success by David Swensen
David Swensen's long and successful experience managing the gigantic Yale University endowment fund gives him deep knowledge of how the investment industry works and how various types of assets perform, knowledge that he passes along to the reader in this book. He recommends using only certain asset classes and passive index funds for most investors, and explains why in a cogent, persuasive fashion backed by logic and data. Who knows, in a few years the investment strategy he advocates could become the mainstream conventional approach.
All About Asset Allocation by Richard Ferri
This blog has emphasized the importance of asset allocation as a means to lower investment risk and achieve steadier returns. Ferri's book walks us through in more detail from the ground up why asset allocation works and how to do it properly using ETFs or mutual funds.
The New Investment Frontier III by Howard Atkinson
It's still the best book about ETFs in Canada, despite getting out of date due to the multiplication of new ETFs on the market. The explanation of how ETFs function in comparison to mutual funds, the discussion of indices, the run-through on income tax implications, all are as true today as when the book was last revised.
Uncontrolled Risk by Mark T. Williams
Interested to know who to blame for the 2008 credit crisis? Read this book to find out who else there is besides the obvious culprits in investment banking. Through the story of the collapse of central player Lehman Brothers, Williams shows how 2008 was the culmination of decades of build-up among many players. Along the way we learn what acronyms like CDS and MBS mean ... without our brain hurting too much. The scary thing is the author's conclusion that the risk of systemic financial collapse still remains.
Happy holidays to all and good reading!
Disclaimer: this post is my opinion only and should not be construed as investment advice. Readers should be aware that the above comparisons are not an investment recommendation. They rest on other sources, whose accuracy is not guaranteed and the article may not interpret such results correctly. Do your homework before making any decisions and consider consulting a professional advisor.
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