Perhaps you can’t find the time for 200 books; that’s fine, Darvas was an overachiever. You can gain a perfectly firm foundation in stock investing with a handful of good books. All the others you read will help to keep your mind sharp and tighten your skills.
I get asked all the time what books to read, and I tell people, and have even bought people these books, and they almost never read them. Guess what? You know the answer. So at least read a core group of books and you’ll be ahead of the curve and gain an edge in the market. I’ve known plenty of professional stock brokers who haven’t read many books and who haven’t educated themselves on the different approaches out there.
My essential recommended reading list (focused on growth investing) you should tackle before investing serious money is as follows:
The Dow Theory, Robert Rhea
Reminiscences of a Stock Operator, Edwin LeFevre
The Battle for Investment Survival, Gerald Loeb
How I Made $2,000,000 in the Stock Market, Nicolas Darvas
How to Make Money in Stocks, William O’Neil
While I think you should read books on different styles of investing (value investing, technical analysis, dividend plays, etc.), I prefer investing in stocks poised for tremendous growth, and this reading list favors this approach.
The Dow Theory might be the toughest to get through as it is a bit dry and somewhat dated, which makes it a little unclear. You have to excuse, or put into historic perspective, the book’s heavy emphasis on the railroads, which were a much more significant element of the American economy over 100 years ago. Nonetheless, the book serves as a nice explanation for stock market movements from the eyes of none other than Charles Dow and a long-time editor of the Wall Street Journal, William Peter Hamilton. These two wrote numerous articles explaining how the market moved and how to interpret these moves. This work put into book form the essence of Dow’s theory, which is still fundamentally applicable today.
My favorite book on the list is Reminiscences. It is a thinly veiled account of the life of the famous stock investor, Jesse Livermore. It’s a colorful read in narrative form of Livermore’s life, sure to entertain and educate.
Gerald Loeb’s work is a good one for general stock market themes and the wisdom of investing, not so much for a specific system. Perhaps the most important piece of advice in the book is cutting your losses religiously, and the keen observation that stocks which make new highs generally continue to do so, while stocks that make new lows generally continue to do so.
Darvas’ book is a lot of fun to read. It’s a blow by blow account of a man who educated himself in becoming a truly successful investor, and who did so despite traveling the world as a professional dancer in the late 50’s without the internet, cell phones, computers or even up to the minute information (he had stock quotes wired to each hotel he’d be staying at each day).
O’Neil’s book opened the world of investing to me. If you were going to only read one book, read that one (even though my favorite read is Reminiscences). O’Neil is very much like Darvas in that he educated himself and researched heavily to develop his theories. O’Neil actually studied the exact buys of the best funds in the country to discover what they were doing. He ordered their records and found some of the best funds were purchasing shares of stocks that were hitting new highs – counterintuitive to many investors. He catalogued thousands of stock charts and poured over them, discovering a timeless movement in winning stocks. Buy his most recent book and you’ll see for yourself the actual stock charts of companies from the late 1800’s to today in there. You will be amazed at how the stock patterns repeat themselves in each bull market. It speaks for itself.
I have some of these charts (and the original stock certificates) framed on the walls in my home to remind me of these winners.
Posts
No comments:
Post a Comment