The stock market has the ability to pick someone from the road and sit them on the moon and vice versa. So it is crucial to understand the core of value investing before investing in any stock. First, learn and then implement. According to Warren Buffett, understand a business before investing in it. If you don’t know how it works, what it does, and you don’t know its finances, it’s better to stay away. When it comes to learning, no method can beat books. And the same applies to value investing as well. So, here we came with a list of the best value investing books that will help you to understand the basics of value investing.
Best 5 Value Investing Books
1. The Dhandho Investor: The Low-Risk Value Method to High Returns
Mohnish Pabrai, the author of this book and managing partner of Pabrai Investment Funds, is an esteemed businessman, investor, and Philanthropist of this decade. He started an investment fund named “Pabrai Investment Funds” based upon the same model of Warren Buffett’s partnership which was in the 1950s. Since its inception, that investment fund has delivered more than 28% return annually and beat the S&P 500 index.
The central concept of this book is “low risk, high return”. He explained it with a few case studies of famous business models such as ArcelorMittal and Virgin Company. This is a great book that can help you to gain an in-depth knowledge of value investing. The best thing about this book is, all the investment principles are explained in such a way that anyone who does not have any finance background can understand it easily.
2. The Little Book That Beats The Market
This 456 pages book was written by a Princeton economist, Burton Gordon Malkiel. The core idea of this book is based upon the “random walk hypothesis” which is a financial hypothesis that tells that the stock market prices act as a random walk and can’t be predicted. As of 2020, there are twelve editions of this book.
Malkiel insists on the fact that the future can’t be predicted and analysis and research based on factual information. This book is best for those investors who want to know to the core of the stock market. Readers will find some great insight through it that will help them to make more well-informed decisions into the factors which can influence stocks and prices.
3. The Intelligent Investor
Benjamin Graham, the author of this investing books, is known as the father of value investing. He was an investor, economist, and professor. Some of his disciples gained substantial success in their life, and Warren Buffett was one of them. “The Intelligent Investor” is also known as the bible of value investing.
He referred to the market as a man “Mr. Market“. The book has a wealth of critical investing concepts that help to build the value investing foundation. It has tons of time-tested lessons for investors. If someone wants to become a successful value investor, then this book is the best and highly recommended book now.
4. The Warren Buffett Way
If you are a fan of Warren Buffett and want to learn his value investing strategies and principles, then this book is a must-read for you. Robert Hagstrom covers all the necessary aspects to become a successful investor in this book that anyone can apply immediately to their portfolio.
The book starts with the early life of Warren Buffett and how he started investing in shares at the age of eleven. Then how he met Benjamin Graham and read his book “The Intelligent Investor”. And then he ended up taking admission in the Columbia Business School just to learn investing from Graham. Further, Graham asked him to join his business, and that’s where he learned all the specifics of investing. The book also contains his partnership with Charlie Munger in Berkshire Hathaway.
5. The Essays of Warren Buffett: Lessons for Investors and Managers
The most successful investor until now, Warren Buffett is the writer of this book. He has shared his ideas, strategies, and the fundamentals of value investing in this book. He has made billions of dollars by investing in the right stocks that made him the most successful investor.
In this value investing books, he explained various elements of investing, including index funds, junk bonds, and modern portfolio theory. According to Warren Buffett, there is three value investing rules. First, Treat the market as your business partner. Second, understand the Margin of a safety rule, which means to put your money in those stocks which have a lower price than the actual rate. Finally, the circle of competence, which means don’t put your money in any business you don’t know how it works? What it does and how its finance works.
Bottom Line
Trading and investing have the potential to make anyone Warren Buffett and also make one bankrupt by destroying their wealth. That is why learning is essential. A book is a collection of one’s life experiences. Reading some good books will help you to avoid those mistakes that the writers have made and will lead you towards ultimate success.
