Five Essential Books for Investors

Posted On: 2006-10-09Length: 4:44

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Even if you consider yourself a sophisticated investor, reading books on the subject is a great way to keep your skills sharp. But with bookstore shelves brimming with investment advice, how do you separate the informative and readable from the vacuous and dull? In this Fidelity Personal Finance podcast, one author's opinion on what he considers a must-read list for today's informed investor.

Michael Sincere spent years as a trader and author. And although he admits this list is by no means comprehensive, here are five books he thinks are a good start for those interested in reading the classics. The first book Michael Sincere recommends is Reminiscences of a Stock Operator by Edward LaFavre. Although revised a little over 10 years ago, the original book was written more than 80 years ago and is considered a classic, containing lessons that remain relevant today, and is often mentioned by traders and investors as one of the best. Loosely based on the life of legendary stock trader, Jessie Livermore, it's a page-turner that reads like a trader's diary.

Another book is How to make money in stocks by William O'Neil. O'Neil, chairman and founder of Investor's Business Daily was one of the first to clearly explain how to select profitable stocks using both fundamental and technical analysis. In this best-selling book, first published in 1988, he introduces traders and investors to his rule-based trading system, Can Slim, which uses a common sense approach to buying stocks. In case you're wondering, Can Slim is an acronym that stands for Current Quarterly Earnings Per Share, Annual Earnings Per share, New Products, Shares Outstanding, Leaders, Institutional sponsorship and market direction.

Another must-read according to Sincere is The Intelligent Investor by Benjamin Graham. Originally published in 1949 and revised a few years ago, this is often referred to as the Bible of Fundamental Analysis. Graham, considered by many to be the world's greatest investment adviser of the 20th century, introduced a generation of investors to a strategy known as "value investing." He learned from an early age the importance of thoroughly researching a company and determining whether its stock price is a good value. Although the original version of the book was difficult to read, the terminology in the revised version is markedly improved.

A fourth book Sincere recommends is One Up on Wall Street, by Peter Lynch with John Rothchild. Lynch, Fidelity vice chairman and the former manager of the Fidelity Magellan fund, is recognized as one of the most successful portfolio mangers of all time. When he wrote One up on Wall Street in the late 80s, many investors knew little about buying and selling stocks. With his reader-friendly writing style, Lynch taught investors and traders to examine the company behind the stock, building upon Graham's ideas. In One Up on Wall Street Lynch explained how investors could identify profitable companies based on their own experience and observations.

And Sincere's final recommendation is, The Essays of Warren Buffet, by Lawrence...