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Business, Finance, Occupation & Industry

3 Beach Reads That Will Make You a Way Better Investor

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By Michael Lewis

Best investing books

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For those who have had the pleasure of completing an undergraduate finance program, it is a mild surprise (to say the least) to find that the real world of finance and investing is quite different from the efficiency-laden lessons of academia.

While this is frustrating to those who paid the price in time an tuition, it should be encouraging to the average investor who has no formal education in the subject. The truth is, right now, retail stock pickers have the same tools and tricks available to them as the world’s most successful investors.

So, in the spirit of summertime leisure, here is a hot list of books for investors that will get you on par with the very best.

The Classic Text

To recommend “The Intelligent Investor” is by no means a novel idea (pun absolutely intended), but it is, by far, the greatest quick read on the subject of stock picking. Written by Warren Buffett‘s mentor, Benjamin Graham, “The Intelligent Investor” provides the mental lattice all investors would do well to cling to.

Sure, the book champions value investing, which is not the only way to invest, but it can help investors of all kinds — even those interested in the next big technology winner.

Graham spells out the difference between speculation and investing — a concept that is often cited but which few seem to truly espouse. The Columbia professor and investing guru uses the allegory of Mr. Market to describe the battiness of the public markets, and how you can use that to your advantage.

While academic finance touts Efficient Market Theory — the idea that securities are priced with near perfection at all times — Graham posits nearly the opposite: Stocks can fall out of favor for reasons that do little to reflect the intrinsic value of a company — creating a price rift. Graham, Buffett, and the majority of the world’s greatest stock pickers believe that stocks drift toward that intrinsic number over time. Their track records support the claim.

With clear explanations of concepts such as margin of safety and defensive investing, “The Intelligent Investor” should be No. 1 on every investor’s reading list.

The Everyman Investor’s Bible

Peter Lynch, vice chairman of Fidelity’s investment advisory and former manager of the Fidelity Magellan Fund — the strongest performer of its (and his) kind from 1977 to 1990 — is great at writing simple, actionable investment lessons.

“One Up on Wall Street” is the shining example on the subject of DIY investing.

Though “The Intelligent Investor” is itself a very readable, simple book, Lynch’s classic explains in plain language strategies you may already employ. For example, Lynch loves “buy what you know,” the art of walking down the street and observing which brands are moving fast and which stores have lines …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

1 Dividend Stock Every Investor Should Own

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By John Maxfield, The Motley Fool

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It’s easy to lose sight of the purpose of investing. Despite what CNBC might lead you to believe, investing is not about adroitly maneuvering in and out of the market on a daily, if not hourly, basis trying to beat the pros. The only one that gets rich when you do this is your broker — ever wonder why brokerage commercials show people with home offices far nicer than yours?

The true purpose is instead much more pedestrian in nature — as billionaire George Soros has been known to say, “If investing is entertaining, if you’re having fun, you’re probably not making any money.” First and foremost, the purpose of investing is to preserve your hard-earned capital against inflation. And beyond this, it’s to generate a respectable return.

So how do you go about doing this?

Most people think the way to do so is to pick great stocks. I would agree, with a caveat.

Picking individual stocks that don’t put your capital at undue risk while also offering a reasonable return is hard. Anybody who leads to you believe otherwise has no idea what they’re talking about. What do you think the world’s greatest investors do all day? Here’s a hint: They don’t have day jobs — or, rather, their day jobs revolve exclusively around investing.

It’s easy for people like Peter Lynch, the longtime manager of Fidelity’s Magellan Fund, to proclaim that you should “invest in what you know,” or for Warren Buffett, the greatest investor of all time (click here to see Buffett’s 10 largest stock holdings), to quip that you should “be fearful when others are greedy and greedy when others are fearful,” but the fact of the matter is that these guys didn’t get rich by following cliches. They got rich by spending countless hours studying the companies behind the stocks they invested in — or, perhaps more importantly, didn’t invest in.

With this in mind, here’s something else Lynch has said: “If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.” I don’t know if you play poker, but your odds aren’t very good if you don’t know what’s in your hand.

If you nevertheless want to go down this path, subscribe to our Stock Advisor newsletter service. That’s a shameless pitch, I know. But hear me out. It’s run by demonstrated winners who, as far as I can tell, spend the vast majority of their waking hours reading up on, researching, and thinking about great companies. And they have the results to back it up. Since starting the service in 2002, their picks have returned 105%, outperforming the S&P 500 by 69%.

In the event you’re not convinced — and given my obvious bias, I couldn’t blame you — here’s what I recommend: Buy index funds, and exchange-traded funds in particular (click here to

Source: FULL ARTICLE at DailyFinance