Best Value Investing book for New Investors

**blast_investor** Fri Dec 31, 2004 6:02 pm

Best Value Investing book for New Investors
I got this question a lot: What is the best book out there for
a newbie in value investing?

I found the best book is Ben Graham "Intelligent Investor".
This is a must-have book for any serious value investor. Whether you
are passive investor in value mutual fund or a BIRTP model portfolio
follower or an aggressive investor that manage your picks by yourself,
this book can help you to understand basics of value investing.

**jeep** Fri Mar 11, 2005 12:48 pm

My thoughts on some "must-reads".

B Graham's "Intelligent Investor" is not an easy read. The book has a lot of information and there's no doubt it is the best value investing book out there. However, because of the writing style, it's not easy to follow for a newbie. This is a book you can and should read many times.

P Lynch's "One up on Wall Street" is polished by a professional writer (J Rothchild), so it is much easier to read. The book provides a lot of insights why a leisure investor has the opportunity of finding hidden gems before they are noticed by stock analysts. I think this is the best book to start with.

If you don't have any economics background, "Guide to Wall Street Journal" is a great book which introduces you some causal relationships among different economic factors: trade deficit, inflation, interest rates, etc.

G Soros's "The Alchemy of Finance", as Soros acknowledges himself, is very abstract, so it's difficult to apply his stuff in a real market. It's a book you can read many times and each time you'll have new discoveries and understand it better.

I somehow feel Mary Buffett's "Buffettology" mis-leading. She didn't seem to have read Graham's "Intelligent Investor" and made some wrong comments about Graham's point of view on stock choice. The useful point of view in this book is not only value, but also prospects should be considered in investing decisions.

If you are determined to be a value investor, you can ignore all the books on Technical Analysis. You'll have to un-learn those stuff once you are used to reading charts (I don't know how blast managed it, not easy). To be fair, there *might* be some use for TA to avoid disasters, but for a time span >1 year, most TA "disasters" will give in to the company's fundamentals anyway.

On top of everything, as Lynch puts it: people spend more time on grocery shopping than picking a stock!! It is time-consuming to come up with good stock picks. If you don't have the time/capability/mentality to do it, the best solution is to be a passive investor.

**jeep** Thu Mar 31, 2005 1:09 am

The difficult part is, Lynch and Graham's methods sometimes conflict.

In general, both like cheap stocks (so asset play would be fine for both Lynch and Graham), but Lynch is more open to growth stocks, emphasizing a company's growth or turnaround potential (or scalability); while Graham is almost solely based on value.

Lynch would buy a stock with PE 20-30 if he believe the underlining model has really good prospects, which might be why he has 10-baggers, 20-baggers from time to time. But he probably has more losers than Graham, so one needs a slightly more diversified portfolio using Lynch's method.

Somehow I feel WB is in between: he's more Graham, but he also puts more weight on growth potential than Graham.

**blast_investor** Thu Mar 31, 2005 2:38 am

jeep: your observation on Lynch and W Buffet and P Lynch is very valid.

By the way, I still believe the best book is Ben Graham book

The reason is that:

I believe it is better for a new investor to ignore growth investing first and focus on value stocks only because value stocks are the safest and most profitable investment anyway.

It is wrong to say that Warren Buffet invest only in "consumer manopoly growth stocks" or Peter Lynch only invest in growth stocks. They all invest in low PE value stocks. Value stocks are core investment and B Graham is father of value investing.

Of course, I personally believe growth stocks are great investment for the long term as long as the valuation is carefully considered and margin of safety rule is maintained. I like the Warren Buffet "approach" a lot more than that of P Lynch. I think cheap growth stocks have room for at least part of value investors' portfolio.

Of course, I do agree that Peter Lynch is better writer and his book is easier to understand than B Graham's book.

**weirei** Thu Jun 02, 2005 10:40 am

which book is the best for learning Buffett theory/ method?
Mary Buffett's?
Thanks

**blast_investor** Thu Jun 02, 2005 2:55 pm

Re: which book is the best for learning Buffett theory/ meth
Warren Buffet never wrote book on his method. He never disclosed his method in detail.

However, his former daughter-in-law Mary Buffet wrote books on him. book names:
Buffettology seriers books.

You can get them from Amazon, search "Buffettology".

The books are good, probably best Warren Buffet books out there, except that they only talk about "consumer monopoly growth stocks" that Buffet invested.

Warren Buffet has been a hardcore follower of Benjamin Graham, especially when he was young. Warren Buffet made fortune using Ben Graham's method first in his earlier years. Any book on Warren Buffet method without mentioninng Ben Graham is not the whole picture..

weirei wrote: Mary Buffett's?
Thanks

**weirei** Thu Jun 02, 2005 3:18 pm

Thanks blast
I just ordered. That's true. When I searched the book of Buffett. I don't found any book written by him while lots of book are talking about him.
Thank you.

**memento** Wed Jun 15, 2005 9:03 am

jeep wrote: If you don't have any economics background, "Guide to Wall Street Journal" is a great book which introduces you some causal relationships among different economic factors: trade deficit, inflation, interest rates, etc.

I am interested in such a general book, but I didn't find a book named "Guide to Wall Street Journal" :roll: Do you mean this book instead:

The Wall Street Journal Guide to Understanding Money and Investing by Kenneth M. Morris, Virginia B. Morris

The third edition just came out last year

Thanks a lot

**Mosguy** Mon Apr 23, 2007 6:59 am

The Intelligent Investor is the greatest book on investing ever written. Why everyone doesn't follow its advice is amazing to me and financially fattening to me.